Existing estimation methods for multi-factor CES functions require limiting assumptions about the nature of technical change. We demonstrate how a system of equations and a fixed elasticity in the nested process can provide identification for more flexible specifications and for small data...

We empirically show that the short-run elasticity of substitution between capital and labor ($\sigma_t$) is countercyclical. In recessions, capital and labor are more substitutable than in expansions. We explore the effects of the countercyclicality of $\sigma_t$ on aggregate fluctuations in the...

We investigate the demand for energy and the degree of substitutability among fossil fuels in the United States using the Normalized Quadratic (NQ) expenditure function and (to our knowledge) the longest span prices and quantities that have ever been studied before, from 1919 to 2012. In doing...

The U.S. shale boom has profoundly increased crude oil movements by both pipelines–the traditional mode of transportation–and railroads. This paper develops a model of how pipeline investment and railroad use are determined in equilibrium, emphasizing how railroads' flexibility allows them...

The elasticity of substitution between capital and labor (σ) is usually considered a "deep parameter". This paper shows, in contrast, that σ is affected by both globalization and technology, and that different intensities in these drivers have different consequences for the OECD and the...

The non-constancy of factor shares is drawing the attention of many researchers. We document an average drop of the labour share of 8 percentage points for eight European countries and the US between 1980 and 2007. We investigate theoretically and empirically two mechanisms: the substitution...

This paper extends the analysis of Junge and Kugler (2013) on the effects of increased capital requirements on Swiss GDP and obtains the following main results: First the Modigliani-Miller effect is robust with respect to a substantial extension of the data base and yields an offset of capital...