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A flexible specification of adjustment costs in dynamic factor demand models

Authors
Journal
Economics Letters
0165-1765
Publisher
Elsevier
Publication Date
Volume
72
Issue
2
Identifiers
DOI: 10.1016/s0165-1765(01)00430-x
Keywords
  • Euler Equation
  • Panel Data
  • Experience Effect

Abstract

Abstract This paper proposes a flexible form of adjustment cost function. An empirical illustration shows that the flexible form can detect both convex and non-convex adjustment costs. Furthermore, the flexible form permits testing for the experience effect on adjustment cost.

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