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The Structure of Adjustment Costs in Information Technology Investment

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Author Info
Hyunbae Chun () (Queens College, City University of New York)
Sung-Bae Mun () (Korea Information Strategy Development Institute)

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Abstract

We examine the pattern of information technology (IT) capital adjustment using data from U.S. industries. Using the gap between actual and desired IT capital stocks, we estimate the shape of the adjustment cost function in IT investment. Both ordinary least squares and nonparametric regression estimates support irreversibility in IT investment.

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File URL: http://economicsbulletin.vanderbilt.edu/2005/volume5/EB-05E20001A.pdf
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 5 (2005)
Issue (Month): 4 ()
Pages: 1-9
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:5:y:2005:i:4:p:1-9

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Related research
Keywords: Adjustment Cost; Information Technology; Irreversible Investment;

Find related papers by JEL classification:
E2 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
O3 - Economic Development, Technological Change, and Growth - - Technological Change

References listed on IDEAS
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  1. Caballero, Ricardo J & Engel, Eduardo M R A & Haltiwanger, John, 1997. "Aggregate Employment Dynamics: Building from Microeconomic Evidence," American Economic Review, American Economic Association, vol. 87(1), pages 115-37, March. [Downloadable!] (restricted)
    Other versions:
  2. Austan Goolsbee & David B. Gross, 1997. "Estimating Adjustment Costs with Data on Heterogeneous Capital Goods," NBER Working Papers 6342, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Adonis Yatchew, 1998. "Nonparametric Regression Techniques in Economics," Journal of Economic Literature, American Economic Association, vol. 36(2), pages 669-721, June. [Downloadable!] (restricted)
  4. Kiley, Michael T., 2001. "Computers and growth with frictions: aggregate and disaggregate evidence," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 171-215, December. [Downloadable!] (restricted)
  5. Ricardo J. Caballero, 1997. "Aggregate Investment," NBER Working Papers 6264, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Dale W. Jorgenson, 1972. "Investment Behavior and the Production Function," Bell Journal of Economics, The RAND Corporation, vol. 3(1), pages 220-251, Spring. [Downloadable!] (restricted)
  7. Gaston Gelos, R. & Isgut, Alberto, 2001. "Irreversibilities in fixed capital adjustment: Evidence from Mexican and Colombian plants," Economics Letters, Elsevier, vol. 74(1), pages 85-89, December. [Downloadable!] (restricted)
  8. Jason G. Cummins, 2004. "A new approach to the valuation of intangible capital," Finance and Economics Discussion Series 2004-17, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  9. Ricardo J. Caballero & Eduardo M. R. A. Engel & John C. Haltiwanger, 1995. "Plant-Level Adjustment and Aggregate Investment Dynamics," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1995-2), pages 1-54. [Downloadable!]
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