Machine Replacement and the Business Cycle: Lumps and Bumps

Dynamics of investment and firm performance: comparative evidence from manufacturing industries

“…To enhance the comparability of results with previous studies we pick 20% as the threshold value as in Cooper et al (1999) and other works. This threshold is set with the purpose of eliminating routine maintenance expenditures.…”

“…Another important feature of investment determinants is related to the dynamics of investment across periods. The investigation of the shape of investment spikes hazard functions (defined as the probability of having a new spike as a function of the time since the last spike) provides contrasting evidence (see Cooper et al, 1999;Bigsten et al, 2005;Whited, 2006). The first two works report a negative duration dependence (the likelihood of having a new spike decreases with the time since the last spike), while the latter reveals an increasing hazard function.…”

“…The first three are taken from the literature, respectively from Cooper et al (1999), Power (1998) and Nilsen et al (2009). The last one is our own contribution to the identification of investment spike, and it allows to overcome some of the shortcomings of the other measures.…”

Interest-Rate Rules in a New Keynesian Framework with Investment

“…Caballero (1999) shows that this model has not performed well at an aggregate level; besides, some industry studies 88 suggest that both convex and non-convex adjustment costs can be observed in practice. That is why an alternative approach to the standard convex cost model has been advocated recently by Eberly (1994, 1996), Caballero et al (1995), and Cooper et al (1999), emphasizing that non-convexities and irreversibility play an important role in the investment process. Paez-Farrell (2003) points out that the realistic modeling of adjustment costs is hindered by the fact that they are difficult to quantify.…”

Markup cyclicality and input factor adjustments

“…Empirical evidence indicates that adjustment costs of capital are non-convex and irreversible. See for instance Doms and Dunne (1998), Cooper, Haltiwanger and Power (1999), Abel and Eberly (2002), and Nilsen and Schiantarelli (2003). labour and other factors through assumptions on returns to scale.…”