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A Dynamic Factor Demand Model for the Swedish Pulp Industry, 1998

Listed author(s):
  • Lundgren, Tommy


    (Department of Forest Economics)

  • Sjöström, Magnus


    (Department of Economics, Umeå University)

In this paper we specify and estimate a dynamic factor demand model for the Swedish pulp industry. Firms are assumed to have rational expectations and costs of adjustment will arise when the capital stock is altered. The estimates are based on plant level panel data for the period 1972-1990. We find weak evidence of the presence of adjustment costs. All the estimated own price elasticities are negative and the empirical cost function have all the desired properties from theory. The result suggest that user cost of capital is a significant determinant of pulp industry investment, while output level is not. We also find that pulp industry investment is insensitive to variations in the price of electricity.

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Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 479.

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Length: 20 pages
Date of creation: 18 Oct 1998
Handle: RePEc:hhs:umnees:0479
Contact details of provider: Postal:
Department of Economics, Umeå University, S-901 87 Umeå, Sweden

Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
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