This paper presents a dynamic model of the industrial demands for structures, equipment, and blue- and white-collar labor. Our approach is consistent with producers holding rational expectations and optimizing dynamically in the presence of adjustment costs, yet it permits generality of...

This paper analyses an empirical, dynamic optimization-based model of factor demand for n quasi-fixed factors in US industries, under the assumption that firms produce output to stock subject to polynomial adjustment costs. Each factor and the stock of inventories adjust to discrepancies in all...

In this paper we discuss recent advances in modeling and estimating dynamic factor demand models, and review the use of such models in analyzing the production structure, the determinants of variable and quasi-fixed factors, and productivity growth. The paper also discusses the traditional...

Prucha and Nadiri (1982,1986,1988) introduced a methodology to estimate systems of dynamic factor demand that allows for considerable flexibility in both the choice of the functional form of the technology and the expectation formation process. This paper applies this methodology to estimate the...

The role of product market reforms in achieving the objective of higher employment and growth has recently received much attention amongst academics. The aim of this paper is to analyse some of the channels through which cross-market effects come about and to assess their policy relevance. The...

The concept of the "employment thresholdin the public discussion of unemployment. The employment threshold is defined as that growth rate of output which is necessary to keep employment constant despite the continuous rise in labour productivity. It is related to the Okun coefficient which...

The objective of this paper is to analyze the relative importance of knowledge inputs(or “technical change”) and input prices in explaining factor demand in Argentine agriculture.Motivation for the paper is the fifteen-fold increase in fertilizer demand observed in Argentina inthe 1990-2019...

Adjustment costs impair the optimal allocation of production factor across firms. In this paper, we use the cost associated with corporate relocation to explore the effect of the adjustment costs of the premises size on factor demand. We rely on the tax on realized capital gains on real estate...

The purpose of this paper is to analyze the direct rebound effect potentially prevailing in energy intense industries. The rebound effect represents economic mechanisms that will offset energy savings from energy efficiency improvements. For this purpose, a factor demand model is applied...

This paper presents firm-level estimates of revenue-based total factor productivity premiums of manufacturing firms adopting digital technology in 82 developing economies over 2002-19. The paper estimates productivity using the control function approach and assuming an endogenous revenue-based...

This paper argues that factor demand linkages can be important for the transmission of both sectoral and aggregate shocks. We show this using a panel of highly disaggregated manufacturing sectors together with sectoral structural VARs. When sectoral interactions are explicitly accounted for, a...

We use a translog cost function to model production in the Irish manufacturing sector over the period from 1991 to 2009. We estimate both own- and cross-price elasticities and Morishima elasticities of substitution between capital, labour, materials and energy. We find that capital and energy...

The empirical analysis of the economic interactions between factors of production, output and corresponding prices has received much attention over the last two decades. Most contributions in this area have agreed on the neoclassical principle of a representative optimizing firm and typically...

An ECM is derived from first order conditions of a factor demand model. Decisions on inventory stock and capacity utilization are (endogenously) modeled, by which a large system of equations results. Within this system the exogeneity of real factor prices as well as sales is tested. The role of...

In this paper we explore the impact of imperfectly competitive input markets on production function estimation. First order profit maximizing conditions are altered when frictions in input markets cause the elasticity of input supply to the firm to be finite. A consequence of this is that the...

In order to explain cyclical behaviour of factor demand, the static neo-classical model of the firm has been extended to include either adjustment costs (e.g. Lucas (1967)) or time-to-build considerations as in Kydland and Prescott (1982). This paper presents an intertemporal factor demand model...

In this paper we explore the impact of imperfectly competitive input markets on production function estimation. First order profit maximizing conditions are altered when frictions in input markets cause the elasticity of input supply to the firm to be finite. A consequence of this is that the...

An ECM is derived from first order conditions of a factor demand model. The role of inventory stock in the long run, i.e. a precautionary measure (according to Holt, Modigliani, Muth and Simon (1960)), and/or the role as a production factor (Kydland and Prescott (1982), Christiano (1988)) are...

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....

In this paper we develop a model to describe a firm’s demand for two production factors which is subject to the presence of nonconvex adjustment costs. In our model simultaneous adjustment of these two production factors may either increase or decrease the total costs incurred by the firm. The...

A structural model is developed and estimated by a maximum likelihood routine to investigate interrelated factor demand subject to nonconvex adjustment costs. The dataset concerns Norwegian plants operating in manufacturing industries and it covers the period 1993-2005. The estimates indicate...

A structural model is developed and estimated by a maximum likelihood routine to investigate interrelated factor demand subject to nonconvex adjustment costs. The dataset concerns Norwegian plants operating in manufacturing industries and it covers the period 1993-2005. The estimates indicate...

This paper argues that factor demand linkages can be important for the transmission of both sectoral and aggregate shocks. We show this using a panel of highly disaggregated manufacturing sectors together with sectoral structural VARs. When sectoral interactions are explicitly accounted for, a...

This paper deals with the implications of factor demand linkages for monetary policy design. We consider a dynamic general equilibrium model with two sectors that produce durable and non-durable goods, respectively. Part of the output of each sector serves as a production input in both sectors,...

Studies of the firm's demand for factor inputs often assume a constant rate of utilization of the inputs and ignore the fact that the firm can simultaneously choose the level and the rate of utilization of its inputs. In particular, the literature on dynamic factor demand models has, until...

A structural model is developed and estimated by a maximum likelihood routine to investigate interrelated factor demand subject to nonconvex adjustment costs. The dataset concerns Norwegian plants operating in manufacturing industries and it covers the period 1993-2005. The estimates indicate...

This study deals with the determinants of factor demand in 27 industries of the manufacturing sector during the period 1978 to 1990. Using a quadratic cost function, six production factors are distinguished: Capital, energy, three types of labour and intermediate materials. A parametric test of...

The rational expectations approach to adjustment cost models for factor demand is used to develop a dynamic model for US cigarette manufacturing. In the present study dynamic production modelling is extended to the case of multiple outputs. This analysis is the first to address cigarette...