A new look at firm market value, investment, and adjustment costs
Article Abstract:
Two new methods have been developed for estimating structural parameters related to adjustment costs. The first procedure is based on a closed-form solution for the value of the firm's optimal program obtained through the Bellman equation. The other is based on the first-order condition for investment. Both techniques are better than the conventional Q regression approach with sensitivities that are ten times greater than that for the latter. It was also estimated that the cost of installing new capital is between 10% to 13% of the total investment cost.
Publication Name: Review of Economics and Statistics
Subject: Mathematics
ISSN: 0034-6535
Year: 1999
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Further evidence on Japanese direct investment in U.S. manufacturing
Article Abstract:
The analysis of Bruce Kogut and Sea Jin Chiang in 'Technological Capabilities and Japanese Foreign Direct Investment in the US' is broadened in examining the cross-industry factors accounting for Japanese direct investment into US production. Results indicate that the intensity of Japanese R&D is a significant beneficial determinant for Japanese foreign direct investment as a whole and for greenfield investments.
Publication Name: Review of Economics and Statistics
Subject: Mathematics
ISSN: 0034-6535
Year: 1996
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Investment under uncertain market conditions
Article Abstract:
Investment decisions of firms are studied in response to uncertain market conditions using stock market information on excess returns. The developed structural framework is used to analyze US firms in four manufacturing industries from 1959-1985. Economically sensible estimates of the cost of adjusting the capital stock were derived.
Publication Name: Review of Economics and Statistics
Subject: Mathematics
ISSN: 0034-6535
Year: 1995
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