The optimal solution of the model with physical and human capital adjustment costs

2004 ◽  
Vol 9 (4) ◽  
pp. 404-406
Author(s):  
Rao Lan-lan ◽  
Cai Dong-han
Keyword(s):  
Human Capital ◽  
Optimal Solution ◽  
Adjustment Costs ◽  
Capital Adjustment

scholarly journals A Search-Theoretic Monetary Business Cycle Model with Capital Formation

2006 ◽  
Vol 6 (1) ◽  
pp. 1-36 ◽  
Author(s):  
Martin Menner
Keyword(s):  
Business Cycle ◽  
Adjustment Costs ◽  
Capital Formation ◽  
Propagation Mechanism ◽  
Monetary Model ◽  
Search Intensity ◽  
Capital Adjustment ◽  
Inventory Investment ◽  
Business Cycle Model ◽  
Divisible Goods

Search-theory has become the main paradigm for the micro-foundation of money. But no comprehensive business cycle analysis has been undertaken yet with a search-based monetary model. This paper extends the model with divisible goods and divisible money of Shi (JET, 1998) to allow for capital formation, analyses the monetary propagation mechanism and contrasts the model's implications with US business cycle stylized facts. The propagation mechanism based on a feedback between increased search intensity and depleted inventories only survives in the presence of non-negligible capital adjustment costs. With intermediate adjustment costs the model is able to replicate fairly well the volatility and cross-correlation with output of key US time series, including sales and inventory investment.

scholarly journals Should individuals migrate before acquiring education or after? A new model of Brain Waste vs. Brain Drain

2019 ◽  
Vol 19 (2) ◽  
Author(s):  
Elise S. Brezis
Keyword(s):  
Human Capital ◽  
Brain Drain ◽  
Return Migration ◽  
Optimal Solution ◽  
Unified Model ◽  
New Model ◽  
Unique Model ◽  
Migration Decisions ◽  
Timing Of Migration

AbstractShould individuals migrate before acquiring education or after? In order to analyze the optimality of the timing of migration, I develop a model of migration, which combines the two migration decisions into a unique model – the decisions about where to get an education and about where to work. The main reason for having a unified model is that investment in human capital cannot be disjoined from the decision about work. This paper shows that brain drain is usually an optimal solution. But, when we incorporate “brain waste” and “return migration”, then it is optimal to migrate when young.

scholarly journals Investment Dispersion and the Business Cycle

2014 ◽  
Vol 104 (4) ◽  
pp. 1392-1416 ◽  
Author(s):  
Rüdiger Bachmann ◽  
Christian Bayer
Keyword(s):  
Business Cycle ◽  
Adjustment Costs ◽  
Firm Risk ◽  
Firm Level ◽  
Cross Sectional ◽  
Capital Adjustment ◽  
Investment Rates ◽  
Business Cycle Model ◽  
The Business Cycle ◽  
Heterogeneous Firm

The cross-sectional dispersion of firm-level investment rates is procyclical. This makes investment rates different from productivity, output, and employment growth, which have countercyclical dispersions. A calibrated heterogeneous-firm business cycle model with nonconvex capital adjustment costs and countercyclical dispersion of firm-level productivity shocks replicates these facts and produces a correlation between investment dispersion and aggregate output of 0.53, close to 0.45 in the data. We find that small shocks to the dispersion of productivity, which in the model constitutes firm risk, suffice to generate the mildly procyclical investment dispersion in the data but do not produce serious business cycles. (JEL D42, D92, E32, G31, G32)

Adjustment Costs and Irreversibility as Determinants of Investment: Evidence from African Manufacturing

2005 ◽  
Vol 4 (1) ◽  
Author(s):  
Arne Bigsten ◽  
Paul Collier ◽  
Stefan Dercon ◽  
Marcel Fafchamps ◽  
Bernard Gauthier ◽  
...  
Keyword(s):  
Discrete Choice ◽  
Choice Model ◽  
Adjustment Costs ◽  
Manufacturing Firms ◽  
Fixed Costs ◽  
Dynamic Discrete Choice ◽  
African Countries ◽  
Dynamic Discrete Choice Model ◽  
Capital Adjustment ◽  
Investment Patterns

Abstract In this paper we investigate if the predictions of three different models of capital adjustment costs are consistent with the observed investment patterns among manufacturing firms in five African countries. We document a high frequency of zero investment episodes, which is consistent with both fixed adjustment costs and irreversibility and inconsistent with quadratic adjustment costs. We model the decision to invest using a dynamic discrete choice model and find evidence of irreversibility and not fixed costs. We finally model the investment rate as a function of the size of the capital disequilibrium. The results confirm that irreversibility is an important factor affecting the investment behaviour of African manufacturing firms. Some implications of this finding are discussed.

scholarly journals FDI Asymmetries in Emerging Economies: The Case of Colombia

2019 ◽  
Vol 11 (8) ◽  
pp. 35
Author(s):  
Jose U. Mora ◽  
Celso J. Costa Junior
Keyword(s):  
Emerging Economies ◽  
Adjustment Costs ◽  
Nominal Wage ◽  
Real Output ◽  
Empirical Results ◽  
Capital Adjustment ◽  
Long Run ◽  
Price Rigidities ◽  
Short Run ◽  
Distribution Of Income

We build a DSGE model to study the asymmetries of FDI shocks in an economy like Colombia. Besides nominal wage and price rigidities, we use the fact that Colombia has two productive and differentiated regions, Bogota that produces more than 25% of Colombia GDP (DANE, 2016) and the rest of the country, Ricardian and non-Ricardian agents, habit formation, capital adjustment costs, and modeled an entire foreign sector. Empirical results show that even when in the long run results are not very different in terms of real output, the short run effects are asymmetric implying that a shock to FDI in the rest of the country might cause important microeconomic adjustments that could improve the distribution of income throughout the country.

Using Digital Programs and Technologies to Simulate Business Development

2021 ◽  
pp. 71-87
Author(s):  
Ionica Oncioiu ◽  
Mihaela Mirela Dogaru ◽  
Manoela Popescu
Keyword(s):  
Human Capital ◽  
Decision Maker ◽  
High Probability ◽  
Optimal Solution ◽  
Digital Age ◽  
Business Development ◽  
Organizational Goal ◽  
Business People ◽  
Proper Management ◽  
Short Period

The priorities of business people in the digital age are human capital and innovation. As the changes are fast, in the digital age, the decision maker will not look for the optimal solution, but will stop at the first solution that he considers satisfactory and will put it into practice as soon as possible, given the fact that there is a high probability that the opportunity or the conditions for materializing the decision must change, even before the implementation of the decision. The use of digital programs and technologies to simulate the company's development decisions can circumvent these shortcomings, at least for a short period of time. This chapter shows that, in an increasingly digitized world, there is widespread recognition that a strong organizational goal is essential for any company, as well as an awareness that trust is becoming increasingly difficult to gain. Also, the proper management of the growing expectations of stakeholders contributes to building the confidence needed for an organization to survive and thrive.

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