Conventional neoclassical investment models predict that firms should make frequent, small adjustments to their capital stocks. Microeconomic evidence however, shows just the opposite – firms make infrequent, large adjustments to their capital stocks. In response, researchers have developed...

During the period 1990-93, Finland experienced the deepest economic downturn in an industrialized country since the 1930s. We argue that the collapse of the Finnish trade with the Soviet Union in and of itself resulted in a large contraction of the economy and a costly restructuring of the...