Adjustment Costs

Adjustment Costs

The costs associated with making any changes. For example, one must consider adjustment costs for hiring a new employee, or the costs of lost production in the event of layoffs. All companies have adjustment costs, especially when they seek to achieve greater efficiency.
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This approach, the first-of-its-kind on the market, speeds up decision-making for items in question into the first day of processing, reducing fraud and adjustment costs.
The second component, similar to Hopenhayn and Rogerson (1993), is firm dynamics under labor adjustment costs.
The authors propose a production-based asset pricing model with adjustment costs in labor and capital that replicates well the main empirical findings.
Hartquist concluded, "China must take responsibility for creating stable financial conditions instead of forcing other economies to suffer the adjustment costs of China's exchange rate policy.
Third, we take as our reference point a model in which a fixed quantity of land produces a fixed output per period, and then move to models with endogenous capital and adjustment costs.
Besides, the existence of labor adjustment costs and, importantly, uncertainty about future productivity and wages, implies that, despite the perfect substitution between worker types, the optimal proportion of temporary employment is not either zero or one in most of the cases.
ICE(TM) -- The HiMEX Intelligent Claims Environment(TM) is our cutting edge claims tool that uses automatic crash detection and notification to compress and automate the claims lifecycle to reduce fraud and adjustment costs while increasing consumer satisfaction.
Over the program horizon, they target a structural fiscal adjustment of 2 percent of GDP, which will appropriately balance the need to keep public debt on a sustainable path while minimizing the adjustment costs to the economy.
Equation (20) is a standard law of motion of capital, which depreciates at rate [delta], and investment is subject to adjustment costs as in Smets and Wouters (2007), where S(1) = S'(1) = 0 and S" (1) > 0.
To understand the value premium, I also develop a dynamic, quantitative investment model in which asymmetric adjustment costs of capital and the counter-cyclical price of risk combine to cause assets in place to be harder to adjust downward (and therefore riskier) than growth options, especially in bad times when the price of risk is high.
This strengthens the argument for a prolonged recession, as a considerable part of the adjustment costs may incur not only in 2014 but, possibly, continue in subsequent years.
This can be explained by noting that while the lower payout consistency costs and standard deviation of shocks to income induce lower cash balances, the effect of lower estimated investment adjustment costs and larger fixed equity issuance cost parameters counterbalance these forces giving rise to similar cash-to-assets ratios.