Title: Investment adjustment costs
Description: "In aggregate models, costs that penalise changes in investment--investment adjustment costs-- have been introduced to help account for a variety of business cycle and asset market phenomena.  In this paper, we evaluate empirical evidence for these types of costs using US and UK industry  data. We consider a general adjustment cost structure which nests both investment adjustment  costs and the traditional capital adjustment costs as special cases. The estimated weight on the  former is close to zero for all the industries. When only the investment adjustment cost structure is  considered, the estimates of the adjustment cost parameter are small relative to those based on  aggregate data, and imply an elasticity of investment with respect to the shadow price of capital  (the value to the firm of one additional unit of capital) fifteen times larger than that found in  aggregate studies. Our results suggest that from a disaggregated empirical perspective it remains  difficult to motivate and interpret the investment friction considered in recent macroeconomic  models."--Bank of England web site.