IDEAS home Printed from https://ideas.repec.org/a/ecj/econjl/v115y2005i506p969-986.html
   My bibliography  Save this article

Capital Adjustment Patterns In Swedish Manufacturing Firms: What Model Do They Suggest?

Author

Listed:
  • Mikael Carlsson
  • Stefan Laséen

Abstract

We study the capital adjustment process in Swedish manufacturing Firms and relate the findings to standard models of capital adjustment. We have three findings. ("i") The capital accumulation process is highly volatile and non-persistent. ("ii") An "S", "s" model fits the data well in some, but not all, dimensions. Also, a model with irreversible capital goes a long way in matching the data. In fact, we argue that it is much more likely that the data reflect irreversibility than fix adjustment costs. ("iii") The estimated adjustment function implies that aggregate investment is relatively unresponsive in deep recessions as compared to normal times. Copyright 2005 Royal Economic Society.

Suggested Citation

  • Mikael Carlsson & Stefan Laséen, 2005. "Capital Adjustment Patterns In Swedish Manufacturing Firms: What Model Do They Suggest?," Economic Journal, Royal Economic Society, vol. 115(506), pages 969-986, October.
  • Handle: RePEc:ecj:econjl:v:115:y:2005:i:506:p:969-986
    as

    Download full text from publisher

    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2005.01027.x
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Caballero, Ricardo J., 1999. "Aggregate investment," Handbook of Macroeconomics,in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 12, pages 813-862 Elsevier.
    2. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, January.
    3. Dufwenberg, Martin & Koskenkyla, Heikki & Sodersten, Jan, 1994. " Manufacturing Investment and Taxation in the Nordic Countries," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(3), pages 443-461.
    4. Øivind Anti Nilsen & Fabio Schiantarelli, 2003. "Zeros and Lumps in Investment: Empirical Evidence on Irreversibilities and Nonconvexities," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 1021-1037, November.
    5. Caballero, Ricardo J, 1994. "Small Sample Bias and Adjustment Costs," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 52-58, February.
    6. 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.
    7. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
    8. 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(2), pages 1-54.
    9. Dufwenberg, Martin & Koskenkylä, Heikki & Södersten, Jan, 1994. "Manufacturing investment and taxation in the Nordic countries," Research Discussion Papers 8/1994, Bank of Finland.
    10. Prakash Loungani & Bharat Trehan, 1997. "Job creation and destruction," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue may2.
    11. Guiseppe Bertola & Ricardo J. Caballero, 1994. "Irreversibility and Aggregate Investment," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 223-246.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Del Boca, Alessandra & Galeotti, Marzio & Rota, Paola, 2008. "Non-convexities in the adjustment of different capital inputs: A firm-level investigation," European Economic Review, Elsevier, vol. 52(2), pages 315-337, February.
    2. Marco Grazzi & Nadia Jacoby & Tania Treibich, 2016. "Dynamics of investment and firm performance: comparative evidence from manufacturing industries," Empirical Economics, Springer, vol. 51(1), pages 125-179, August.
    3. Fabio Verona, 2014. "Investment Dynamics with Information Costs," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(8), pages 1627-1656, December.
    4. Schulte, Reinhard, 2015. "On real investment by new ventures," Lüneburger Beiträge zur Gründungsforschung 12, Leuphana University of Lüneburg, Department of Entrepreneurship & Start-up Management.
    5. Bayer, Christian, 2008. "On the interaction of financial frictions and fixed capital adjustment costs: Evidence from a panel of German firms," Journal of Economic Dynamics and Control, Elsevier, vol. 32(11), pages 3538-3559, November.
    6. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2009. "Lumpy investments, factor adjustments, and labour productivity," Oxford Economic Papers, Oxford University Press, vol. 61(1), pages 104-127, January.
    7. 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.
    8. Fabio Pieri, 2015. "Vertical organization of production and firm growth behavior," Working Papers 1508, Department of Applied Economics II, Universidad de Valencia.
    9. Fabio Pieri, 2016. "Vertical organization of production and firm growth," DEM Working Papers 2016/01, Department of Economics and Management.
    10. Mikael Carlsson, 2007. "Investment and Uncertainty: A Theory-based Empirical Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(5), pages 603-617, October.
    11. Øivind A. Nilsen & Arvid Raknerud & Marina Rybalka & Terje Skjerpen, 2005. "Lumpy Investments, Factor Adjustments and Productivity," Discussion Papers 441, Statistics Norway, Research Department.
    12. Pinar Geylani, 2015. "Lumpy investments and capital adjustment patterns in the food manufacturing industry," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 39(3), pages 501-517, July.
    13. Lundin, Magnus & Gottfries, Nils & Lindström, Tomas, 2004. "Price and Investment Dynamics: An Empirical Analysis of Plant Level Data," Working Paper Series 2004:7, Uppsala University, Department of Economics.
    14. Tomat, Gian Maria, 2008. "Modeling the Effects of Financial Constraints on Firm's Investment," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-26.

    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:115:y:2005:i:506:p:969-986. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/resssea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.