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The paper provides an empirical investigation into the nature of adjustment costs and their implications for modelling and investment process. In particular, their role in today's most popular models of investment, the rational flexible accelerator and Tobin's q, is considered. In the analysis it is assumed that costs of adjusting the level of quasi-fixed inputs affects the firm's operations independently of specific optimal decision rules for investment. The results show that the pattern of adjustment costs is consistent with the solution of the optimization problem faced by the firm. However, such structure is more complex than what is usually postulated in the literature. Finally costs of adjustment represent a significant portion of the unit cost of new capital goods.

We study how oil supply shocks affect the output growth of selected countries in the Mediterranean region. We focus on the effects of oil supply shocks on economic activity, as measured by real gross value added, for the whole economy, as well as for specific industries. We show that the response of real gross value added growth is negative and often statistically significant for net energy importers, while for net energy exporters it is not distinguishable from zero. This result holds for the aggregate economies, as well as for the selected industries. Moreover, the effects of oil supply shocks increase with the degree of energy dependence in the Mediterranean countries belonging to the European Union. Our results have several policy implications. First, the European Union should encourage projects on the efficient use of energy in the Mediterranean area. Second, European financial markets should promote appropriate financial instruments to stimulate investments in the Mediterranean energy sector. Third, international investors should consider the country-specific reactions to major macroeconomic shocks in the Mediterranean region.

In this paper, we examine the similarities and the differences between two global problems, the coronavirus pandemic and climate change, and the extent to which the experience with the COVID-19 pandemic can be of use for tackling climate change. We show that both problems share the same microeconomic foundations, involving an overprovision of a global public bad. In addition, they entail externalities whose correction comes at very high economic and social costs. We leverage on a well-established problem such as climate change that has been studied for several years now, to highlight the common traits with the COVID-19 pandemic, but also important differences. The COVID-19 crisis is itself a reality check for climate policy, international governance and prevention in general. Indeed, the COVID-19 pandemic is a mock laboratory of climate change, where the time scale of unfolding events is reduced from decades to days. While the former is often measured in days, weeks, months, years, the latter is measured in years, decades, and centuries.