This paper uses the response of investment to identified structural shocks to investigate some key issues, including … the nature of adjustment costs and investment's responsiveness to user cost. In the estimation, the model parameters are … investment- and capital-stock adjustment costs are important; the size of the capital-stock adjustment costs is in line with …

holds for the microeconomic response of some of the most important economic variables, such as investment, labor demand, and … actual response to shocks is less than half as fast as the estimated response. For investment, labor demand and prices, the …, even after aggregating investment across all establishments in U.S. manufacturing, the estimate of its speed of adjustment …