Empirical analyses of firm behaviour typically assume that there is a stable relationship between investment on the one hand and changes in the relative prices of inputs, output demand and other determinants on the other hand. However, because of the lumpy nature and irreversibility of...

The small country assumption affects the modelling of the export demand and export price equations. A large (monopolistic) country can set its export price as a mark-up over marginal cost, because it has market power. In contrast, small countries have to deal with competition which forces prices...

This paper analyses inventory investment using a balanced panel of 82 Dutch firms. We start from the Lovell (1961) inventory model and amend it with cash flow to introduce capital market imperfections. The empirical evidence provides support for the relevance of capital market imperfections in...