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Asymmetric Adjustment of Dynamic Factors at the Firm Level

Author

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  • Alfons Oude Lansink
  • Spiro E. Stefanou

Abstract

This study provides a framework for consistent estimation of a dynamic dual model of investment for the case where data reveal zero and nonzero investments. The threshold model that is developed maintains that investments are zero if the shadow value of machinery is between a lower and an upper threshold. Separate equations are estimated for the investment and the disinvestment regime. A significant difference between the parameters of the investment and disinvestment equations is found. The stock of machinery adjusts slower toward the long-run equilibrium target during an investment regime than during a contracting regime. Copyright 1997, Oxford University Press.

Suggested Citation

  • Alfons Oude Lansink & Spiro E. Stefanou, 1997. "Asymmetric Adjustment of Dynamic Factors at the Firm Level," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1340-1351.
    • Handle: RePEc:oup:ajagec:v:79:y:1997:i:4:p:1340-1351
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