The seminar will be held in room Szechenyi at 10 am. in English language.
This paper describes a method of structural estimation of firm-level investment costs, based on a dynamic investment model. While traditional investment models consider only the convex costs of investment activity, our model also takes into account the fix and irreversibility costs of investment. These cost components are consistent with the stylized facts documented by the empirical literature over the past decade. We use an unbalanced panel of US manufacturing firms between 1959-87 to estimate the model. Our results indicate that fixed and irreversibility costs are indeed significant. In particular, we find strong evidence of partial irreversibility, which is of much higher extent than estimated previously.
A note to external guests: please notify Eszter Szilágyi (szilagyiesz@mnb.hu) if you plan to attend, so that we can submit a list of attandees to our reception desk.