D'Erasmo, Pablo (2006): Investment and firm dynamics.
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In this paper I ask whether a model of ¯rm capital accumulation with entry and exit calibrated to match the investment regularities of U.S. establishments is capable of generating the dependence of ¯rm dynamics on size and age. Firms face uncertainty in the form of idiosyncratic productivity shocks and are subject to non-convex capital adjustment costs. I solve for the stationary equilibrium to show that the model can account for the simultaneous dependence of industry dynamics on size (once we condition on age) and on age (once we condition on size).
|Item Type:||MPRA Paper|
|Institution:||University of Texas at Austin|
|Original Title:||Investment and firm dynamics|
|Keywords:||firm dynamics; investment; financial constraints|
|Subjects:||D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory
G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice; Investment Decisions
E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E22 - Capital; Investment; Capacity
|Depositing User:||Pablo D'Erasmo|
|Date Deposited:||13. Jul 2007|
|Last Modified:||13. Feb 2013 09:10|
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Investment and firm dynamics. (deposited 17. Jun 2007)
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