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Lumpy Investments, Factor Adjustments and Productivity

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  • Øivind A. Nilsen
  • Arvid Raknerud
  • Marina Rybalka
  • Terje Skjerpen

    ()
    (Statistics Norway)

Abstract

This paper describes firms' output and factor demand before, during and after episodes of lumpy investments using a rich employer-employee panel data set for two manufacturing industries and one service industry. We focus on the simultaneous adjustment of capital, materials, man-hours, as well as the skill composition and hourly cost of labour. The investment spikes lead to roughly proportional changes in sales, labour and materials, while capital intensity increases significantly. Capital adjustments are found to be smoother in the service industry than in the two manufacturing industries, a difference that may be related to the labour intensity in the service industry. Finally, the changes in productivity associated with episodes of investment spikes are small, indicating that productivity improvements are related to learning-by-doing rather than instantaneous technological changes through investment spikes.

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Bibliographic Info

Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 441.

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Date of creation: Dec 2005
Date of revision:
Handle: RePEc:ssb:dispap:441

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Keywords: Lumpy investments; Adjustment costs; Productivity; Panel data;

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Cited by:
  1. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2008. "Skill Composition: Exploring a Wage-based Skill Measure," Discussion Papers 531, Research Department of Statistics Norway.
  2. Sandra Martina Leitner, 2008. "Interrelatedness, Dynamic Factor Adjustment Patterns and Firm Heterogeneity in Austrian Manufacturing," Economics working papers 2008-03, Department of Economics, Johannes Kepler University Linz, Austria.

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