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Dynamic Factor Demands and Technology Measurement under Arbitrary Expectations

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  • Pierre Lasserre
  • Pierre Ouellette

Abstract

We present a dynamic model of factor demands based on expected discounted costs minimization. While making only very mild assumptions on expectations and technology, we are able to establish a duality relationship between contemporary factor demands and the technology, and we provide formula for easily recovering marginal products, returns to scale, and technological change from estimated factor demands. Parametrization and implementation are illustrated in a detailed example. Copyright Kluwer Academic Publishers 1999

Suggested Citation

  • Pierre Lasserre & Pierre Ouellette, 1999. "Dynamic Factor Demands and Technology Measurement under Arbitrary Expectations," Journal of Productivity Analysis, Springer, vol. 11(3), pages 219-241, June.
    • Handle: RePEc:kap:jproda:v:11:y:1999:i:3:p:219-241
    DOI: 10.1023/A:1007790020454
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    References listed on IDEAS

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    5. Nadiri, M. Ishaq & Prucha, Ingmar R., 1990. "Dynamic factor demand models, productivity measurement, and rates of return: Theory and an empirical application to the US Bell System," Structural Change and Economic Dynamics, Elsevier, vol. 1(2), pages 263-289, December.
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    7. Epstein, Larry G & Denny, Michael G S, 1983. "The Multivariate Flexible Accelerator Model: Its Empirical Restrictions and an Application to U.S. Manufacturing," Econometrica, Econometric Society, vol. 51(3), pages 647-674, May.
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    9. McLaren, Keith R & Cooper, Russel J, 1980. "Intertemporal Duality: Application to the Theory of the Firm," Econometrica, Econometric Society, vol. 48(7), pages 1755-1762, November.
    10. McElroy, Marjorie B, 1987. "Additive General Error Models for Production, Cost, and Derived Demand or Share Systems," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 737-757, August.
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    Cited by:

    1. Pierre Ouellette & Stéphane Vigeant, 2003. "Technological choices and regulation: the case of the Canadian manufacturing sectors," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 36(1), pages 88-125, March.
    2. Pierre Ouellette & Li Yan, 2008. "Investment and dynamic DEA," Journal of Productivity Analysis, Springer, vol. 29(3), pages 235-247, June.
    3. Caputo, Michael R., 2003. "The comparative dynamics of closed-loop controls for discounted infinite horizon optimal control problems," Journal of Economic Dynamics and Control, Elsevier, vol. 27(8), pages 1335-1365, June.
    4. Pierre Ouellette & Stéphane Vigeant, 2000. "A General Procedure to Recover the Marginal Products of a Cost Minimizing Firm," Journal of Productivity Analysis, Springer, vol. 14(2), pages 143-162, September.
    5. Krysiak, Frank C., 2006. "Stochastic intertemporal duality: An application to investment under uncertainty," Journal of Economic Dynamics and Control, Elsevier, vol. 30(8), pages 1363-1387, August.
    6. Matteo Manera, 2006. "Modelling factor demands with SEM and VAR: an empirical comparison," Journal of Productivity Analysis, Springer, vol. 26(2), pages 121-146, October.
    7. Silva, Elvira & Lansink, Alfons Oude & Stefanou, Spiro E., 2015. "The adjustment-cost model of the firm: Duality and productive efficiency," International Journal of Production Economics, Elsevier, vol. 168(C), pages 245-256.
    8. Frank Asche & Subal Kumbhakar & Ragnar Tveteras, 2008. "A dynamic profit function with adjustment costs for outputs," Empirical Economics, Springer, vol. 35(2), pages 379-393, September.
    9. Elvira Silva & Alfons Oude Lansink, 2013. "Dynamic Efficiency Measurement: A Directional Distance Function Approach," CEF.UP Working Papers 1307, Universidade do Porto, Faculdade de Economia do Porto.
    10. Swetlana Renner & Thomas Glauben & Heinrich Hockmann & Pierre Ouellette, 2015. "Primal and dual multi-output flexibility measures," Journal of Productivity Analysis, Springer, vol. 44(2), pages 127-136, October.

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