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Asymmetric Adjustment of Dynamic Factors at the Firm Level
Author(s) -
Lansink Alfons Oude,
Stefanou Spiro E.
Publication year - 1997
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1244290
Subject(s) - disinvestment , economics , investment (military) , stock (firearms) , econometrics , microeconomics , monetary economics , mechanical engineering , politics , political science , law , incentive , engineering
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.