The Dynamic Demand for Capital and Labor
AbstractA 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.
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Bibliographic InfoArticle provided by MIT Press in its journal Quarterly Journal of Economics.
Volume (Year): 101 (1986)
Issue (Month): 3 (August)
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Other versions of this item:
- Matthew D. Shapiro, 1987. "The Dynamic Demand for Capital and Labor," NBER Working Papers 1899, National Bureau of Economic Research, Inc.
- Matthew D. Shapiro, 1984. "The Dynamic Demand for Capital and Labor," Cowles Foundation Discussion Papers 735, Cowles Foundation for Research in Economics, Yale University.
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- Bernanke, Ben S, 1986.
"Employment, Hours, and Earnings in the Depression: An Analysis of EightManufacturing Industries,"
American Economic Review,
American Economic Association, vol. 76(1), pages 82-109, March.
- Ben S. Bernanke, 1985. "Employment, Hours, and Earnings in the Depression: An Analysis of EightManufacturing Industries," NBER Working Papers 1642, National Bureau of Economic Research, Inc.
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