Irreversibilities in Fixed Capital Adjustment - Evidence from Mexican and Colombian Plants

Posted: 2 Apr 2002

See all articles by Gaston Gelos

Gaston Gelos

Bank for International Settlements; Centre for Economic Policy Research (CEPR)

Alberto Isgut

University of Toronto

Abstract

Using two largely novel datasets, we examine how Colombian and Mexican plants invest in response to imbalances between actual and "desired" capital stock levels. Nonparametric estimates of the average adjustment function support the presence of irreversibilities, but not of nonconvexities.

Keywords: Adjustment costs, investment, irreversibilities, plant-level evidence

JEL Classification: E22, O16

Suggested Citation

Gelos, R. Gaston and Isgut, Alberto, Irreversibilities in Fixed Capital Adjustment - Evidence from Mexican and Colombian Plants. Available at SSRN: https://ssrn.com/abstract=303981

R. Gaston Gelos (Contact Author)

Bank for International Settlements ( email )

Centralbankplatz 2
Basel, 4002
Switzerland
0612808201 (Phone)

HOME PAGE: http://https://www.bis.org/author/gaston_gelos.htm

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Alberto Isgut

University of Toronto ( email )

105 St George Street
Toronto, Ontario M5S 3E6 M5S 3G8
Canada

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