We study a model of lumpy investment wherein establishments face persistent shocks to common and plant …-specific productivity, and nonconvex adjustment costs lead them to pursue generalized (S,s) investment rules. We allow persistent … the first model consistent with available evidence on establishment-level investment rates. Examining the implications of …

This paper studies the effect of interest rates on investment in an environment where firms make irreversible … delaying investment. These two forces combine to generate an aggregate investment demand curve that is always a backward …-bending function of the interest rate. At low rates, increasing the interest rate stimulates investment by raising the cost of delay …

chosen to reproduce the nonlinear relationship between investment and profitability that we uncover in the plant-level data …

This paper estimates the micro-level costs of adjusting capital using detailed data on" investment decisions in the US … clear evidence of non-convex adjustment costs inaction for capital investment and quadratic adjustment costs conditional on … positive or negative" investment. The adjustment costs for utilization show similar non-convexities but with smaller …

We examine the extent to which uncertainty delays investment and the effect of competition on this relationship using a … increase in the return volatility reduces the probability of investment by 13 percent, equivalent to a 9 percent decline in …

probability of disaster leads to a collapse of investment and a recession, an increase in risk spreads, and a decrease in the … of business cycle dynamics, especially sharp downturns in investment and output such as 2008-IV …

In this paper we study "investment tournaments," a class of decision problems that involve gradual allocation of … investment among several alternatives whose values are subject to exogenous shocks. The decision-maker's payoff is determined by … an early stage of the tournament in a bid to capture a larger share of employer's investment, such as mentoring …

The theoretical relationship between investment and uncertainty is ambiguous. This paper briefly surveys the insights … that theory has to offer and then runs a series of simple tests aimed at evaluating the empirical significance of various … theoretical effects. Our results from a panel of U.S. manufacturing firms indicate a negative effect of uncertainty on investment …

-going investment costs until completion. Since time to completion is uncertain, the total investment costs will also be uncertain … options at completion (because of fixed final investment costs) we obtain simple closed form solutions. We apply the framework …

This paper derives analytical measures of the combined effects of tax changes and adjustment costs on investment and …