Nonlinear response of firm investment to Q

摘要: Abstract Abel and Eberly (1994) study optimal investment behavior in the presence of flow fixed costs, proportional costs convex costs. A clear prediction is that will alternate between regimes insensitivity responsiveness to q separated by unknown threshold levels . At firm level, we find evidence for different sensitivity but not a regime zero sensitivity. Our finding has nonlinear relationship important because it implies an elasticity aggregate (and fundamentals) high variable over time.