Document Type

Discussion Paper

Publication Date

11-1-1984

CFDP Number

735

CFDP Revision Date

1985-01-01

CFDP Pages

35

Abstract

A model of the dynamically interrelated demand for capital and labor is specified and estimated. The estimates are of the first-order conditions of the firm’s problem rather than of the closed-form decision rules. This use of the first-order conditions allows a random rate of return and a flexible specification of the technology. The estimates do not imply the very slow rates of adjustment displayed in other, related estimates of the demand for capital. Because adjustment is estimated to be rapid, there is, contrary to the standard view, scope for factor-prices to affect investment at relatively high frequencies.

Download

Included in

Economics Commons

Share

COinS