Interpreting adjustment cost effects under asymmetry: a note
This paper examines the Pfann and Verspagen specification for asymmetric adjustment cost. We show that under asymmetry, the coefficient for the linear-quadratic term understates the symmetric part of adjustment cost. The analysis reveals that a positive value for this parameter is sufficient but not necessary for a well-behaved adjustment cost function. The specification satisfies all the requirements when the linear-quadratic coefficient equals zero. We also derive a condition for a well-behaved adjustment cost function within a feasible region when the parameter has negative sign. Since our study expands the range of permissible parameter values, it increases the empirical applicability of the asymmetric adjustment cost function.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 2 (1995)
Issue (Month): 7 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAEL20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAEL20|
When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:2:y:1995:i:7:p:236-238. 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: (Michael McNulty)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 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.