This paper investigates the nature of capital adjustment costs at the plant level, using an indirect inference procedure to estimate the structural parameters of a model that includes both convex and nonconvex adjustment costs and irreversibility. The authors find that a model incorporating both convex and nonconvex adjustment costs, along with irreversibility, best fits the data. They also explore the implications of these findings for macroeconomic policies, such as tax credits, which aim to influence investment and aggregate activity. The study uses data from the Longitudinal Research Database (LRD) of approximately 7,000 large manufacturing plants over the period 1972-1988, focusing on the dynamics of investment and the nonlinear relationship between investment and profitability shocks. The results highlight the importance of nonconvexities in understanding investment behavior and suggest that models with both convex and nonconvex adjustment costs provide a better description of investment dynamics compared to models with only convex or nonconvex costs.This paper investigates the nature of capital adjustment costs at the plant level, using an indirect inference procedure to estimate the structural parameters of a model that includes both convex and nonconvex adjustment costs and irreversibility. The authors find that a model incorporating both convex and nonconvex adjustment costs, along with irreversibility, best fits the data. They also explore the implications of these findings for macroeconomic policies, such as tax credits, which aim to influence investment and aggregate activity. The study uses data from the Longitudinal Research Database (LRD) of approximately 7,000 large manufacturing plants over the period 1972-1988, focusing on the dynamics of investment and the nonlinear relationship between investment and profitability shocks. The results highlight the importance of nonconvexities in understanding investment behavior and suggest that models with both convex and nonconvex adjustment costs provide a better description of investment dynamics compared to models with only convex or nonconvex costs.