In this paper we analyze the structure of adjustment costs for labor. In particular, the question whether hiring and firing costs are asymmetric is addressed. We maintain the standard assumption of quadratic adjustment costs, but allow the multiplicative coefficient to differ for the firing and...

The objective of this paper is to investigate if and how capital adjustment departs from the smooth pattern implied by standard model based on convex adjustment costs. Using Norwegian micro data, we start by documenting the intermittent and lumpy nature of investment rates. We then present two...

The effect of financial liberalization on private saving is theoretically ambiguous, not only because the link between interest rate levels and saving is itself ambiguous, but also because financial liberalization is a multidimensional and phased process, sometimes involving reversals. Using...

In this paper we develop a switching regression model of investment, in which the probability of a firm facing a high premium on external finance is endogenously determined. This approach allows one to address the potential problem of static and dynamic misclassification encountered where firms...

The authors extend the Q theory of investment to allow for adjustment costs for labor, under the additional assumption that the firm is a monopolistic competitor in the output market. The issue of nonconstant returns to scale is also discussed. The authors show that the standard Q model is a...