Fixed capital adjustment: Is Latin America different?

Article Abstract:

We examine capital adjustment patterns using two large and largely novel plant-level data sets from the manufacturing sectors of Colombia and Mexico. The data suggest that irreversibilities play a more important role than in more-advanced economies. However, we do not find support for the presence of increasing returns in the adjustment cost technology, such as arising from fixed costs. Firms go through periods of inaction and rarely sell capital, but they do not invest at discrete times only. An examination of the dynamic patterns of adjustment of factors differing in their flexibility supports this interpretation.

Latin America, Brief Article, Economic research

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Costs of adjustment, the aggregation problem and investment

Article Abstract:

Improper aggregation via the use of a single firm to represent the aggregate investment behavior of heterogeneous firms, typically results in considerably large adjustment costs and cost of capital irrelevance. The Generalized Method of Moments is used to estimate Canadian manufacturing production cost functions in order to remove this bias. The results imply that parameter estimation for representative firms requires disaggregated data.

Economic aspects, Portfolio management, Capital formation, Investment analysis, Securities analysis

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Aggregation and the estimated effects of school resources

Article Abstract:

The estimated effects of data aggregation are investigated to reconcile conflicting results concerning school resources and school effectiveness. Two key differences among studies of educational performance are considered: the level of aggregation of school characteristics and the quantity and type of controls for differences in student backgrounds. Results show that aggregaion inflates the coefficients on school resources.

Management, Schools, Resource allocation

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