Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153000
Authors: 
Bayraktar, Nihal
Sakellaris, Plutarchos
Vermeulen, Philip
Year of Publication: 
2005
Series/Report no.: 
ECB Working Paper 566
Abstract: 
We formulate and estimate a structural model of firm investment behavior that specifies the exact channel through which financial frictions bite. The model also allows for the existence of both convex and non-convex costs to adjusting capital. Essentially, we move beyond simply testing and rejecting a neoclassical model without frictions. Our quantitative estimates show that both real and financial frictions have an important effect on firm investment dynamics.
Subjects: 
adjustment costs
financing constraints
Investment
JEL: 
E22
Document Type: 
Working Paper

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