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We evaluate the empirical evidence for costs that penalize changes in investment using U.S. industry data. In aggregate models, such investment adjustment costs have been introduced to help account for a variety of business cycle and asset market phenomena. So far no attempt has been made to estimate these costs directly at a disaggregated level. We consider an industry model with investment adjustment costs and estimate its parameters using generalized methods of moments. The findings indicate small costs associated with changing the flow of investment at the industry level. The weighted average of the industry elasticities with respect to the shadow price of capital, which depends inversely on the adjustment cost parameter, is eight times larger than the largest estimate reported in Levin et al. (2006). We examine a variety of factors that may account for this discrepancy, but a substantial part of it remains unexplained. Our results therefore suggest that more caution is needed when giving policy advice that hinges on a structural interpretation of large investment adjustment costs.JEL codes: E2, E3 Keyword: investment adjustment costs.FOLLOWING CHRISTIANO , costs to changing the level of investment-investment adjustment costs-have featured prominently in the recent literature on aggregate dynamic general equilibrium models to help account for a variety of macroeconomic phenomenon. In this paper, we attempt to estimate these We thank an anonymous referee,

This paper estimates UK capital adjustment costs, using manufacturing and service industry data for 1970-2000. There is evidence of significant adjustment costs, with a 1% increase in investment reducing value added by 0.05%. This implies an elasticity of investment with respect to Tobin's "q" of 2.5, and a convergence time for capital of 12 years. The results suggest that adjustment costs may have caused half of the slowdown in UK total factor productivity (TFP) growth during the second half of the 1990s. The impact is larger than that reported for the United States, reflecting larger adjustment costs and higher investment growth. Copyright (c) 2007. The Bank of England.

The range of aluminium tolerance in P. aquatica and P. arundinacea L. was examined and compared with the range in some crop and pasture species of known tolerance. In nutrient solution and aluminium-toxic soil, a distinct class of P. aquatica plants extremely sensitive to aluminium was resolved. The tolerance of each P. aquatica line was correlated with the frequency of sensitive plants, which ranged from 0 to 100%. Significant variation in tolerance remained after exclusion of the sensitive class. The aluminium concentration in nutrient solution required for 50% growth reduction varied from approximately 2 to 6 ppm Al among P. aquatica lines. The more tolerant lines, which included Sirosa and Sirolan, were markedly less tolerant than cocksfoot, tall fescue, subterranean clover and known tolerant cereal cultivars. Root extension was the most sensitive character. However, ranking of P. aquatica lines according to yield in solution gave better agreement (r = 0.81, P < 0.01) with ranking according to relative yield in unlimed versus limed aluminium-toxic soil than did root extension in solution (r = 0.69, P < 0.01). Reference to yield is thus considered necessary for selection among more tolerant plants in a breeding program. The aluminium tolerance of P. arundinacea was superior to that of P. aquatica, and P. arundinacea CPI 69103 was as tolerant as tall fescue in aluminium solutions. Significant improvement of P. aquatica appears possible in the longer term by hybridisation with P. arundinacea, whereas limited improvement should be achieved in the short term by intraspecific recombination and selection.

Papers in the seminar series are published on the internet in Adobe Acrobat (PDF) format. Download from http://www.iies.su.se/ Seminar Papers are preliminary material circulated to stimulate discussion and critical comment. February 2002Abstract In a model with heterogenous agents, wage setting by monopoly unions and monetary policy conducted by a central bank, we show that the duration of nominal wage contracts is u-shaped in the degree of centralization, with intermediate bargaining systems yielding contracts of shorter duration and thus more flexible nominal wages than both decentralized and centralized systems. We also find the optimal level of centralization of wage bargaining to be negatively related to the degree of heterogeneity in the economy. The theoretical predictions of the model are tested on OECD data. There is empirical support for the main results regarding contract length, while there is less support for the predictions regarding the level of centralization.JEL Classification: C21, E24, E32, J51