Caballero, Ricardo J.; Engel, Eduardo M. R. A. - In: Econometrica 67 (1999) 4, pp. 783-826
In this paper, the authors derive a model of aggregate investment that builds from the lumpy microeconomic behavior of firms facing stochastic fixed adjustment costs. Instead of the standard sharp (S, s) bands, firms' adjustment policies take the form of a probability of adjustment (adjustment...