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Optimal investment policy with fixed adjustment costs and complete irreversibility

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  • Nicolas Roys

    () (Institute for Fiscal Studies and University of Wisconsin)

Abstract

We develop and solve analytically an investment model with fixed adjust-ment costs and complete irreversibility that reproduces observed investment dynamics at the micro-level. We impose a minimal set of restrictions on technology and uncertainty. Most of the results duplicate or generalize earlier findings that have been established either by simulations or under contrefactual assumptions.

Suggested Citation

  • Nicolas Roys, 2007. "Optimal investment policy with fixed adjustment costs and complete irreversibility," CeMMAP working papers CWP29/07, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  • Handle: RePEc:ifs:cemmap:29/07
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    File URL: http://cemmap.ifs.org.uk/wps/cwp2907.pdf
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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