Structural Change of Factor Substitution in Finnish Manufacturing
AbstractThe possibility of structural change in Finnish factor substitution relations between energy and nonenergy factors is analyzed. The standard generalized Leontief KLEMF cost functions is modified so that the substitution parameters related to electricity and fuel factors may shift to new levels over time. The initial point of transition is 1974, during which the first energy crises took place. Likelihood ratio tests confirm that there has indeed been a statistically significant change in energy versus nonenergy substitution. The authors' estimates imply stronger substitutability for most input pairs after the energy crisis. Copyright 1989 by The editors of the Scandinavian Journal of Economics.
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Bibliographic InfoPaper provided by The Research Institute of the Finnish Economy in its series Discussion Papers with number 281.
Length: 22 pages
Date of creation: 09 Jan 1989
Date of revision:
Other versions of this item:
- Ilmakunnas, Pekka & Torma, Hannu, 1989. " Structural Change in Factor Substitution in Finnish Manufacturing," Scandinavian Journal of Economics, Wiley Blackwell, vol. 91(4), pages 705-21.
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- Kim, Jihyo & Heo, Eunnyeong, 2013. "Asymmetric substitutability between energy and capital: Evidence from the manufacturing sectors in 10 OECD countries," Energy Economics, Elsevier, vol. 40(C), pages 81-89.
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