Generalized Q Models for Investment

We extend the Q theory of investment to allow for adjustment costs for labor, under the additional assumption that the firm is a monopolistic competitor in the output market. The issue of nonconstant returns to scale is also discussed. We show that the standard Q model is a special case of a more general model involving testable parameter restrictions. Estimates for the U.S. manufacturing sector suggest that the departure from the assumption of perfect competition and lack of adjustment costs for labor receive empirical support in the data

Dynamics and Asymetric Adjustment in Insider-Outsider Models

efficiency ; employment ; contracts ; economic equilibrium

Are Adjustment Costs for Labor Asymetric? An Econometric Test On Panel Data for Italy

demand ; employment ; economic models ; trade

Hospital control and multidrug-resistant pulmonary tuberculosis in female patients, Lima, Peru.

We examined the prevalence of tuberculosis (TB), rate of multidrug-resistant (MDR) TB, and characteristics of TB on a female general medicine ward in Peru. Of 250 patients, 40 (16%) were positive by sputum culture and 27 (11%) by smear, and 8 (3%) had MDRTB. Thirteen (33%) of 40 culture-positive patients had not been suspected of having TB on admission. Six (46%) of 13 patients whose TB was unsuspected on admission had MDRTB, compared with 2 (7%) of 27 suspected cases (p = 0.009). Five (63%) of 8 MDRTB patients were smear positive and therefore highly infective. In developing countries, hospital control, a simple method of reducing the spread of MDRTB, is neglected

Firms' investment under financial constraints: a Euro area investigation

In this paper we describe a model of optimal investment of various types of financially constrained firms. We show that the resulting relationship between internal funds and investment is non-monotonic. In particular, the magnitude of the cash flow sensitivity of the investment is lower for firms with credit rationing compared to firms that are able to obtained short-term external financing. The inverse relationship is driven by the leverage multiplier effect. A positive cash flow shock increases the short-term borrowing capacity of the firm, which in turn has a positive effect on investment and firm's growth. Moreover, the leverage multiplier effect is the highest for firms relying on short-term credits and it is lower for firms that are able to obtain long-term financing. Analysing a large euro area data set we find strong empirical support for our theoretical predictions. The results also help to explain some contrasting findings in the financial constraints literature

Debt Maturity Choices, Multi-stage Investments and Financing Constraints

We develop a dynamic investment options framework with optimal capital structure and analyze the effect of debt maturity. We find that in the absence of financing constraints short-term debt maximizes firm value. In contrast with most literature results, in the absence of constraints, higher volatility may increase initial debt for firms with low initial revenues, issuing long term debt that expires after the investment option maturity. This effect, which is due to the option value of receiving the value of assets and remaining tax savings, does not hold for short term debt and firms with high profitability, where an increase in volatility reduces the firm value. The importance of short-term debt is reduced in the presence of non-negative equity net worth or debt financing constraints and firms behave more conservatively in the use of initial debt. With non-negative equity net worth, higher volatility has adverse effects on the firm value, while with debt financing constraints higher volatility may enhance firm value for firms with relatively low revenue that have out-of-the-money investment options