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| Author: | Palm, F. Peters, H. Pfann, G. |
| Title: | Adjustment costs and time-to-build in factor demand in the U.S. manufacturing industry |
| Journal: | Empirical Economics
1993 : VOL. 18:4, p. 639-671 |
| Index terms: | MANUFACTURING INDUSTRY USA ADJUSTMENT COSTS |
| Language: | eng |
| Abstract: | In order to explain cyclical behavior of factor demand, the static neoclassical model of the firm has been extended to include either adjustment costs or time-to-build considerations as in Kydland and Prescott (1982). This paper presents an intertemporal factor demand model which accounts for adjustment costs and gestation lags. The closed form solution of the model is a highly restricted vector ARMA-process that is estimated using quarterly data for the manufacturing industry in the United States, 1960-1988. |
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