A structural model is developed and estimated by a maximum likelihood routine to investigate interrelated factor demand subject to nonconvex adjustment costs. The dataset concerns Norwegian plants operating in manufacturing industries and it covers the period 1993-2005. The estimates indicate...

In this paper advisors are selected by two ministers with conflicting interests in order to (1) acquire information, and (2) obtain political legitimacy concerning a project. In the end, parliament decides whether or not the project, of which the consequences are uncertain, is implemented. In...

The empirical identification of non-linearities in investment relies on how investment is assumed to be separated into various regimes. Using German establishment-level panel data, we estimate a two-regime model of replacement and expansion investment which allows us to observe regime...

In this paper we develop a model to describe a firm’s demand for two production factors which is subject to the presence of nonconvex adjustment costs. In our model simultaneous adjustment of these two production factors may either increase or decrease the total costs incurred by the firm. The...

This paper develops and tests a simple model of the simultaneous determination of gross fixed capital formation by multinational Japanese firms in home and host countries. We treat multinational firms as multi-product firms, choosing optimal investment locations and production scale for each...

We estimate a model of homogeneous capital investment with two installation possibilities - replacement and expansion using observations at the establishment level. We find that regime switches identified by "ad hoc" measures of lumpy investment do not adequately distinguish expansionary from...

The effect of a firm's uncertainty regarding technological development on the formation of alliances is examined, and it is shown that this uncertainty is positively related to the number of alliances. However, higher uncertainty also makes the firm less likely to ally with others if the...

Higher uncertainty about the effects of policy instruments reduces a policymaker's inclination to actively engage in shaping economic policy. If a credibility problem exists, then this is beneficial. However, in the case where the policymaker has private information about an economic shock,...

We develop a simple model in which a firm considers a number of investment projects. Because of limited financial resources, the firm can undertake at most one project. In line with the literature on real options we stress features like irreversibility, uncertainty and the possibility of...

We analyse a game theoretical model in which policy makers have superior knowledge about the working of the economy relative to voters. We show that parties increase their chances of reelection by basing their policies on the model that best fits in with their preferences. Moreover, we show that...