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Leverage as a Conditioning Variable for Employment: An Analysis of a Panel of West German Manufacturing Firms

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  • Michael Funke

    ()

  • Holger Strulik

    ()

Abstract

This paper reports an attempt to implement financial factors into a neoclassical model of optimal factor demand. The theoretical shows that factor demand decisions of firms operating under monopolistic competition or with decreasing returns to scale are affected by financial restrictions. The theoretical model is estimated using West German firm data from 1987 to 1994.

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File URL: http://www.rrz.uni-hamburg.de/wst/qmwps/qm498.ps
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Bibliographic Info

Paper provided by Hamburg University, Department of Economics in its series Quantitative Macroeconomics Working Papers with number 19804.

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Date of creation: Apr 1998
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Handle: RePEc:ham:qmwops:19804

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Keywords: Financial Restrictions; Labour Demand; Panel Data;

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