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Persistence, Asymmetries and Interrelation in Factor Demand

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  • Marga Peeters

Abstract

A neoclassical factor demand model for structures, equipment and labour is analyzed in this paper. 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. First‐order conditions of the model are estimated by the generalized method of moments using manufacturing industry data from the US, Canada, West Germany, the UK (all 1960.I–1988.IV), France (1970.I–1992.II) and the Netherlands (1971.I–1990.IV). The results endorse time‐to‐build for structures, persistence of technology shocks and interrelations in adjustment cost dynamics.

Suggested Citation

  • Marga Peeters, 1998. "Persistence, Asymmetries and Interrelation in Factor Demand," Scandinavian Journal of Economics, Wiley Blackwell, vol. 100(4), pages 747-764, December.
    • Handle: RePEc:bla:scandj:v:100:y:1998:i:4:p:747-764
    DOI: 10.1111/1467-9442.00134
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    Cited by:

    1. Amundsen, Alexander, 2023. "Interaction effects in the adjustment cost function of firms," Journal of Economic Dynamics and Control, Elsevier, vol. 146(C).
    2. Mauro Bambi & Cristina Girolami & Salvatore Federico & Fausto Gozzi, 2017. "Generically distributed investments on flexible projects and endogenous growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(2), pages 521-558, February.
    3. Charles Himmelberg & Alessandra del Boca & Marzio Galeotti & Paola Rota, 2005. "Investment and Time to Plan: A Comparison of Structures vs. Equipment in a Panel of Italian Firms," Working Papers 2005.54, Fondazione Eni Enrico Mattei.
    4. Millar, Jonathan N. & Oliner, Stephen D. & Sichel, Daniel E., 2016. "Time-to-plan lags for commercial construction projects," Regional Science and Urban Economics, Elsevier, vol. 59(C), pages 75-89.
    5. Tsoukalas, John D., 2011. "Time to build capital: Revisiting investment-cash-flow sensitivities," Journal of Economic Dynamics and Control, Elsevier, vol. 35(7), pages 1000-1016, July.
    6. Mauro Bambi & Cristina Di Girolami & Salvatore Federico & Fausto Gozzi, 2014. "On the Consequences of Generically Distributed Investments on Flexible Projects in an Endogenous Growth Model," Discussion Papers 14/15, Department of Economics, University of York.

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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