Capital Adjustment Patterns in Manufacturing Plants

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Capital Adjustment Patterns in Manufacturing Plants

Author Info

Mark Doms
Timothy Dunne

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Abstract

A common result from altering several fundamental assumptions of the neoclassical investment model with convex adjustment costs is that investment may occur in lumpy episodes. This paper takes a step back and asks "How lumpy is the investment?" We answer this question by documenting the distributions of investment and capital adjustment for a sample of over 33,000 manufacturing plants drawn from over 400 four-digit industries. We find that many plants do undergo large investment episodes, however, there is tremendous variation across plants in their capital accumulation patterns. This paper explores how the variation in capital accumulation patterns vary by observable plant and firm characteristics, and how large investment episodes at the plant level transmit into fluctuations in aggregate investment.

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Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 94-11.

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Date of creation: Sep 1994
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Handle: RePEc:cen:wpaper:94-11

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Related research
Keywords: Investment; Capital; Spikes;

Other versions of this item:

Article
- Mark E. Doms & Timothy Dunne, 1998. "Capital Adjustment Patterns in Manufacturing Plants," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(2), pages 409-429, April. [Downloadable!] (restricted)

References listed on IDEAS
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Other versions:
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Other versions:
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Other versions:
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