Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82410
Authors: 
Carlsson, Mikael
Laséen, Stefan
Year of Publication: 
2002
Series/Report no.: 
Sveriges Riksbank Working Paper Series 143
Abstract: 
In this paper we study the capital adjustment process in Swedish manufacturing firms and relate the empirical findings to standard models of firm behavior in the presence of impediments to capital adjustments. We find that (i) an S,s model fits the data well in some, but not all, dimensions. (ii) A model with irreversible capital goes a long way in capturing the salient features of firm-level capital adjustment behavior. (iii) The partial adjustment model generally fails to explain capital adjustment patterns. (iv) The capital accumulation process is a highly volatile and non-persistent process on the firm-level. (v) Firms’ adjustment behavior is asymmetric in that they are more likely to tolerate excess capital than shortages of capital, and, finally, (vi) the estimated adjustment function implies that aggregate investment is relatively unresponsive to aggregate shocks in deep recessions as compared to normal times.
Subjects: 
Investment
Irreversibilities
Lumpiness
Manufacturing
JEL: 
D24
E22
L60
Document Type: 
Working Paper

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