Wang, Pengfei; Wen, Yi - In: Review of Economic Dynamics 15 (2012) 2, pp. 207-225
. These different patterns of investment behavior have been viewed as indicating convex adjustment costs at the aggregate … level but non-convex adjustment costs at the firm level. This paper shows that financial frictions in the form of … collateralized borrowing at the firm level (Kiyotaki and Moore, 1997) can give rise to convex adjustment costs at the aggregate level …