Persistence, Asymmetries and Interrelation in Factor Demand

The Scandinavian Journal of Economics, Vol. 100, No. 4, pp. 747-764, 1998

18 Pages Posted: 31 May 2011 Last revised: 22 Aug 2011

Date Written: May 30, 1998

Abstract

A neoclassical factor demand model for structures, equipment and labour is analyzed. It incorporates a variety of dynamic specifications, such as a multi-period time-to-build for structures, internal adjustment costs for each production factor, and external investment adjustment costs. First-order conditions of the model are estimated by the generalized method of moments using manufacturing industry data from the US, Canada, West Germany, the UK (all 1960.I-1988.IV), France (1970.I-1992.II) and the Netherlands (1971.I-1990.IV). The results endorse time-to-build for structures, persistence of technology shocks and interrelations in adjustment cost dynamics.

Keywords: factor demand, time-to-build, adjustment costs, business cycles, general method of moments, structures, equipment, gestation, irreversibility

JEL Classification: D21, C32, C3, D92, J23

Suggested Citation

Peeters, Marga, Persistence, Asymmetries and Interrelation in Factor Demand (May 30, 1998). The Scandinavian Journal of Economics, Vol. 100, No. 4, pp. 747-764, 1998, Available at SSRN: https://ssrn.com/abstract=1855487

Marga Peeters (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

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