Abel and Eberly (1999) prove that uncertainty has an ambiguous effect on long run capital accumulation in a real options model. We show that, with adjustment costs quadratic in investment, more uncertainty reduces capital and this effect may be large.

Bootstrap confidence intervals on fixed-effects efficiency estimates in micro panels exhibit low coverage probabilities. We propose an alternative efficiency measure involving the mean of the firm effects. With the same estimated efficiency ranks as the traditional measure, its corresponding...