Differing results on investment adjustment costs
A Bank of England paper evaluating the costs of changes in investment shows the elasticity of investment with respect to the shadow price of capital (the value to the firm of one additional unit of capital) to be 15 times larger than aggregate models suggest.
Aggregate models have began to consider the costs, referred to as investment adjustment costs, to account for various business cycle and asset market phenomena. But this research uses empirical evidence from the UK and US and general
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