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Title Adjustments costs, irreversibility and investment patterns in African manufacturing / prepared by Arne Bigsten [and others]
Published [Washington, D.C.] : International Monetary Fund, Research Department, [1999]
Online access available from:
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Description 1 online resource (53 pages) : illustrations
Series IMF working paper, 1018-5941 ; WP/99/99
IMF working paper ; WP/99/99
Summary This paper seeks to determine whether firm level investment behavior in the manufacturing sectors of Cameroon, Ghana, Kenya, Zambia and Zimbabwe is more accurately described by standard theory based on quadratic adjustment costs or by alternative models, based on irreversibilities or fixed costs. The importance of this issue stems first from a theoretical perspective, given that the adjustment cost function constitutes one of the cornerstones of the investment equation, and misspecification of adjustment costs is likely to yield a misspecified investment model. Second, empirically, information on the structure and size of adjustment costs is important for understanding how investment responds to changes in fundamentals. For example, some non-quadratic adjustment cost models imply that firm investment is nonlinear: periods of little response to shocks can be followed by intensive responses to both current and accumulated shocks. The structure of adjustment costs also has significant implications for understanding aggregate investment dynamics. 2
Bibliography Includes bibliographical references (pages 51-53)
Notes Master and use copy. Digital master created according to Benchmark for Faithful Digital Reproductions of Monographs and Serials, Version 1. Digital Library Federation, December 2002. MiAaHDL
digitized 2010 HathiTrust Digital Library committed to preserve pda MiAaHDL
Print version record
Subject Investments -- Africa -- Econometric models.
Manufactures -- Africa -- Econometric models.
Form Electronic book
Author Bigsten, Arne.
International Monetary Fund. Research Department.
ISBN 1281268631
1451897960 (E-Book)