Investment and Exit Decisions at the Plant Level: A Dynamic Programming Approach: Contributions to Economics

1 Introduction.- 2 Theory and empirics of investment: a selective review of the literature.- 2.1 Theories of firm investment and their empirical performance.- 2.2 Firm investment under financial constraints.- 2.3 Non-standard constraints and firm behavior: a research program.- 3 A dynamic programming framework for the analysis of firm decisions.- 3.1 An introduction to Markov decision processes.- 3.2 Strategies for the econometric analysis of dynamic decision processes.- 3.3 An application: firms’ joint investment and exit decisions.- 3.A Appendix: mathematical results.- 4 Plant-level investment and exit decisions and firm-level financial status.- 4.1 Introduction and overview.- 4.2 Alternative measures of a firm’s financial status.- 4.3 The empirical model of firm behavior under financial constraints.- 4.4 Description of the plant-level dataset.- 4.5 A reduced-form model of plant growth and exit.- 4.6 Empirical results for the structural model of investment and exit.- 4.7 Summary and discussion.- 4.A Data appendix.- 5 Concluding remarks.- List of figures.- List of tables.