effects of energy price rise on investment firm level evidence from indian manufacturing sector this paper analyses the effects of the rising prices of energy products on the investment of a large panel of manufacturing firms in india during 1993 2013 the prime motivation behind this study is the absence of an empirical study into this research issue exclusively on indian economy the empirical results obtained by estimating an error correction model ecm using generalized method of moments gmm show that energy price rise has negative effect on the investment of firms in the manufacturing sector the negative effect is transmitted to the firm s investment through both demand side and supply side factors the transmission also depends upon factors such as the energy intensity of production the results also show that the sales growth investment relationship becomes weak in the face of the rising prices of the energy which could be due to the cautious approach to investment adopted by the firms therefore it calls for the attention of the policy makers to evolve a comprehensive energy policy to ensure continuous supply of energy at affordable prices to the manufacturers

the adjustment cost model of the firm duality and productive efficiency we present the theoretical foundation for an adjustment cost technology that supports the intertemporal production decision making behavior using the directional distance function dynamic input efficiency measures are developed that can separate out the impact of variable and dynamic factors inefficiency levels an approach to implement this theory in a nonparametric fashion is developed and applied to an unbalanced panel of dutch glasshouse firms the application finds overuse of all variable inputs and overcapitalization of installations the overall dynamic efficiency gain of 16 remains possible with allocative inefficiencies indicating underinvestment in structures and installations a comparison of static and dynamic efficiency measures finds that the static overall cost inefficiency is overestimated with technical inefficiency being overstated and allocative inefficiency being understated

farmers investment behavior an empirical assessment of two specifications of expectations the capital investment decision is modeled and two different assumptions about expectations are compared and tested using panel data for dutch dairy farms the utilization of panel data allowed to account for the possibility that the intercept in the function for capital varies over the farms the models are estimated using the generalized method of moments gmm for dynamic panel data the model based on static expectations fits the data well the results obtained from the rational expectations model are not consistent with the theory

intertemporal production and intertemporal substitution in output supply and input demand abstractthis article presents an intertemporal model of production with multiple inputs to investigate substitution opportunities facing firms over time the firm s intertemporal profit maximization problem is characterized with the familiar cost function and various intertemporal substitution elasticities are delineated for output supply and input demand the absence of intertemporal substitution in production can imply production smoothing and allowance for intertemporal substitution in labour demand reinforces the prediction of the real business cycle model for aggregate us manufacturing we find substantial substitution in output supply and labour demand over time due to intertemporal changes in output price and wage rates

estimation of scale economies underlying growth and productivity the empirical implications of data aggregation estimation of scale economies underlying growth and productivity patterns is typically based on aggregated data raising questions about the potential for aggregation biases this paper provides empirical evidence on the existence and patterns of such biases we use a cost based model to estimate short long run and internal external scale effects for u s manufacturing data at different aggregation levels our results suggest that aggregation biases in such a model are not substantive also internal scale economies seem more appropriately represented by the aggregate data whereas more disaggregated data appears preferable for estimation of external or spillover effects that occur between industries or sectors

a model of rental housing choices in the korean market the main purpose of this study is to propose and estimate a model of korean rental housing choice using hierarchical logit analysis the study focuses on the examination of how households choose their dwelling units in a complex rental housing market the decision is viewed as a partial sequence process beginning with the choice of rental housing tenure and finishing with a decision on the type of occupation to examine an additional step in the urban spatial structure hedonic price technique is incorporated into a hierarchical logit model in addition the separate effects of permanent and transitory components of measured income are examined through the instrumental variables method based on human capital theory it is shown that the proposed model provides a potentially more useful method than another model the multinomial logit in analysing the korean rental housing market

housing careers in the united states 1968 93 modelling the sequencing of housing states the research in this paper focuses on the housing career during a household s life course the housing career is the sequence of housing states defined in terms of tenure and the quality price of t

factor demand models with nonlinear short run fluctuations abstract this paper considers asymmetric costs of adjustment that propagate nonlinear shortrun fluctuations in stochastic factor demand systems the model endogenously generates asymmetric cyclical demand for capital and labour between peaks and troughs of the business cycle the empirical analysis of the model is based on quarterly time series data of the dutch manufacturing sector for the period 1971 i 1984 iv and annual time series data of the u k manufacturing sector for the period 1955 1986 i find important differences of adjustment speed of capital and labour inputs between expansionary and contractionary phases of the business cycle

comparative analysis of the social demographic and economic factors that influenced housing choices in spain in 1990 and 2000 the housing market is an important sector in the economy of any country residential demand also referred to as housing consumption depends on many demographic and social characteristics of the country s population and is also related to economic factors the aim of the present paper was to evaluate the joint effects of economic demographic and social factors on household behaviour with respect to housing choices in addition an attempt was made to determine the impact of recent economic and structural changes in spanish society in 1990 and 2000 on residential demand it was found that the consequences of these structural changes will have medium and long term effects on housing demand and that the current economic situation has significantly affected the short term changes in this demand

is there a principle for defining industries this paper presents a criterion for dividing observable firms into industries the previous literature has failed to recognize how important is the lack of a principle for forming industries not only does the lack of an industry criterion lead to bad antitrust decisions but it brings into question the logic behind applying standard economic analyses to observable groups of sellers economic theory traditionally has constructed models of markets composed of sellers of a homogeneous commodity in the application of theories to observable sellers whose production processes and products are rarely precisely identical the easy and convenient assumption that all sellers are identical is violated one of the lacks of the theoretical literature is that it has given no guidance on how to put existing producers together to form the markets and industries to which economic modellers make reference instead applied economists have tended to follow the pragmatic advice that violations of assumptions do not matter so long as the firms behave approximately as if the assumptions of the model were satisfied 8 logic requires however that this as if methodology be applied only to firms which have been selected independently of the model being used for example to find the bounds of a competitive industry by finding the group of firms whose behavior is predicted by the competitive model and then to justify the use of the model on the grounds that the model predicts well is tautological the logic of analyzing industry behavior in contradiction to the assumptions of the model is defensible only if there exists a procedure for forming an industry that is independent of the criterion used to select the model to analyze it this paper provides such a procedure the industry bounding procedure outlined in this paper may be one of many and others may be found in the future which have more desirable properties than the one presented here the main contribution of this paper is to demonstrate that there is at least one definition which can be used to divide existing firms into industries and that the industry so defined is unique for each firm the lack of a criterion for defining industries is especially noticeable in antitrust analyses where the question posed is whether a particular firm is a monopoly not whether it behaves as if it were one the current procedure in such cases is ad hoc in the true sense of the term every situation is taken as unique and while the economic witness will sometimes apologize about measurement problems a list of industry members is produced for use in court in what stigler has called an impudent exercise in economic gerrymandering 20 8

dynamic efficiency estimation the shadow cost approach is developed in the context of the dynamic duality model of intertemporal decision making to formulate theoretical and econometric models of dynamic efficiency the dynamic efficiency model is applied to a panel of 72 u s major investor owned electric utilities using fossil fuel fired steam electric power generation over the period 1986 1999 the major results show that most electric utilities underutilized fuel relative to the aggregated labor and the maintenance input and overutilized capital in production states adopting a deregulation plan improve the performance of utilities in terms of the technical efficiency of variable inputs

dwelling unit choice in a condominium complex analysis of willingness to pay and preference heterogeneity we study the choice of dwelling units in a condominium complex a problem that has not been thoroughly investigated in the housing research literature we take a revealed preference approach to quantify home buyers preference toward attributes associated with a dwelling unit in particular we estimate a mixed logit model using the hierarchical bayes approach based on the markov chain monte carlo method we derive the willingness to pay measures for detailed attributes associated with a dwelling unit including its floor level orientation location in the complex location on a floor level and the type of bathrooms we also find strong evidence for the preference heterogeneity among home buyers and conduct regression analysis to explain the preference heterogeneity using home buyers socioeconomic characteristics our results show that home buyers with older ages and higher annual household income tend to focus more on the quality of the dwelling units while first time home buyers are more willing to accept dwelling units with less desirable attributes

oil prices inflation and interest rates in a structural cointegrated var model for the g 7 countries sharp increases in the price of oil are generally seen as a major contributor to business cycle asymmetries moreover the very recent highs registered in the world oil market are causing concern about possible slowdowns in the economic performance of the most developed countries in this paper a structural cointegrated var model has been considered for the g 7 countries in order to study the direct effects of oil price shocks on output and prices and the reaction of monetary variables to external shocks our results can be summarized as follows i a stationary money demand as suggested by the classic theory of money can be identified for most countries ii according to the estimated coefficients of the structural part of the model for all countries except japan and u k the null hypothesis of an influence of oil prices on the inflation rate cannot be rejected inflation rate shocks are transmitted to the real economy by increasing interest rates iii impulse response analysis suggests for most countries the existence of an instantaneous temporary effect of oil price innovations on prices iv impulse response functions indicate different monetary policy reactions to inflationary and growth shocks v the simulation exercises directed to estimate the total impact of the 1990 oil price shock indicate that for some countries u s a significant part of the effects of the oil price shock is due to the monetary policy reaction function for other countries canada france and italy however the total impact is offset at least in part by an easing of monetary conditions

assessing energy price induced improvements in efficiency of capital in oecd manufacturing industries to assess how capital stocks adapt to energy price changes it is necessary to account for the impacts on different vintages of capital and to account separately for price induced and autonomous improvements in the energy efficiency of capital stock the results of econometric analysis for five manufacturing industries in 19 oecd countries between 1990 and 2005 indicate that higher energy prices resulted in smaller energy use due to both improved energy efficiency of capital stock and reduced demand for the energy input the investment response to energy prices varied considerably across manufacturing industries being more significant in energy intensive sectors the results of policy simulations indicate that a carbon tax can deliver significant reductions in energy consumption in the medium run with modest declines in energy using capital stock

public investment and industry incentives in life science research life science research has shifted rapidly from the public to the private sector raising questions about government s remaining role we shed light on the issue by employing a dynamic investment response model to examine the public s impact on industry life science research effort and success we find that government expenditures in both basic biological research and agricultural and medical science create substantial spillovers for private firms the spillovers are unfortunately partly nullified by government competition for scarce research inputs yet even after accounting for such competition public investment has been strongly complementary to private investment indeed opportunities created through public research are the principal source of growth in industry life sciences copyright 2007 oxford university press

an examination of the equilibrium specification and structure of production for canadian telecommunications multiple output models of canadian telecommunications production are estimated under different production equilibria a specification test is conducted between the short and long run equilibrium models and the long run equilibrium is rejected in order to capture the nature of the disequilibrium a dynamic cost of adjustment model is estimated for bell canada there are significant adjustment costs and it is estimated that for 1 00 of marginal capital costs the carrier must incur an additional cost of 0 30 to install the new capital into the production process

modelling the choice of tenure and building type a multinomial logistic mnl model and a naive nested logistic model are estimated to relate differences in household size age income and housing prices to differences in the choice of tenure and building type the estimated models show that the demand for lower density options decreases with a reduction in household size and increases with increasing age and real income higher rents increase the demand for owner occupied single family detached houses higher price levels for the ownership option shift demand toward all of the higher density options particularly toward high rise rental apartments the key assumption underlying the mnl model is examined and shown to not hold true however the differences in the predictions made by the two models are too small to matter in the study of the choices among the major building types issues regarding the choice of models are discussed in the conclusions

gender differences in housing demand this study examines the effect of gender differences in household formation tenure choice housing expenditure and location in vancouver and toronto it shows that the continuing increase in women s income prospects and career orientation will reduce family formation fertility and divorce rates and change housing demand in ways that will affect the growth and character of large canadian cities without in migration the demand for rental housing will decline while the demand for inner city condominiums will grow substantially as women s income prospects approach those of men s the proportion of non family households will continue to increase but the demand for single family suburban houses will continue to grow as the increase in income raises the propensity of both men and women family and non family to buy suburban houses the main reduction will be in the demand for higher density suburban housing the elimination of differences in employment opportunity and career outlook between men and women

the origins and dynamics of production networks in silicon valley abstract computer systems firms in silicon valley are responding to rising costs of product development shorter product cycles and rapid technological change by focusing and building partnerships with suppliers both within and outside of the region well known firms like hewlett packard and apple computers and lesser known ones like silicon graphics and pyramid technology are organized to combine the components and sub systems made by specialist suppliers into new computer systems as these firms collaborate to both define and manufacture new systems they are institutionalizing their capacity to learn from one another three cases a contract manufacturer a silicon foundry and the joint development of a microprocessor illustrate how inter firm networks help account for the sustained technological dynamism of the regional economy

housing and urban location decisions in spain an econometric analysis with unobserved heterogeneity this paper examines the simultaneous individual choices in spain as regards housing tenure choice and demand and urban location decisions taking into account certain unobserved heterogeneity exhibited by individuals a multinomial mixed logit model is proposed to portray household decisions considering four different options homeownership according to the type of urbanisation of the neighbourhood high level urban property medium inferior level urban property and rural property and renting finally housing demand is estimated controlling for sample selection the results confirm that both housing tenure and urban location in addition to the unobserved heterogeneity of individuals in this context could modify appreciably housing demand estimates for both owners and renters

determination of employment with wage and price speculation the purpose of this paper is to investigate whether aggregate fluctuations in employment may be explained within a market clearing framework as intertemporal substitution in labor supply and demand an intertemporal substitution model for the firm is derived this model is estimated with a lucas rapping type supply equation empirical results with finnish data lend support to the intertemporal substitution model particularly concerning the demand function specification on the other hand the results for the supply equation are somewhat mixed being rather sensitive to the dynamic specification

aggregation without separability tests of the united states and mexican agricultural production data the generalized composite commodity theorem gcct and testing procedure is extended to test for consistent aggregation of the united states and mexican agricultural production data in each category for which earlier tests rejected homothetic separability nonrejected gcct and separability hypotheses provide empirical support for aggregating all the united states agricultural outputs into as few as two categories crops and livestock mexican agricultural outputs also can be aggregated into as few as two categories support for aggregating all outputs into a single category is ambiguous in both countries and is only provided by the gcct

a dynamic analysis of interfuel substitution in u s industrial energy demand using data for 1960 92 to analyze interfuel substitution in the u s industrial sector a dynamic linear logit model is shown to provide superior global properties than a comparable dynamic translog model confirming earlier static results by t j considine 1989 the linear logit model provides a direct unbiased estimate of the rate of dynamic adjustment indicating a median response lag of less than two years excluding fuels used for nonenergy purposes yields larger estimates of the price elasticities for coal and oil and indicates generally greater potential for interfuel substitution than when using aggregate data

the general equilibrium costs and impacts of oil price shocks in newfoundland and labrador abstract the 2014 2015 dramatic drop in world oil prices had devastating impacts on a global scale we analyse economic costs and impacts of a negative oil price shock following the 2014 2015 decrease in oil prices on the provincial economy of newfoundland and labrador canada we use a dynamic computable general equilibrium model to estimate a drop in oil prices by inputting the estimated effect as a direct impact to royalties which are the land input in the oil and gas sector of the provincial economy we provide sensitivity to account for the duration and magnitude of the shock as well as the timing of recovery our results suggest that a shock in the price of oil will have its most significant impact on gdp in the initial years over the first five years the reduction in gdp due to this shock would be roughly 2 1 of gdp in our most realistic shock scenario but could be much higher in other scenarios considered a sharp drop in gdp over the first five years will be mitigated somewhat in the long run as the growth in oil prices rises however negative long run impacts to gdp persist due to the oil price shock in 2014 2015 and will worsen if there is a prolonged shock

contribution of new technology based firms to the strengthening of technological capabilities in intermediate economies this paper argues that the main contribution of new technology based firms ntbfs is their technological dynamism which invests them with two major roles a challenging role implicit in their creation whereby they break with the inertia of existing organisations and a more long standing technology transfer role acting as a source of new technologies which they acquire and deliver by several means the performance of these roles can be particularly valuable in less advanced economies contributing to a strengthening of the indigenous capabilities in new technologies empirical research on a sample of portuguese ntbfs has shown that these firms have indeed performed an important function by accessing new technological knowledge both from local public research and from more advanced countries which they further developed turned into marketable applications and commercialised but the conditions found in an intermediate economy such as portugal present ntbfs with particular problems the limited number of knowledgeable users prepared to adopt their products and the firms difficulty to reach other type of clients can be a major obstacle to their development therefore if the country is to profit from ntbfs challenging behaviour and technological competences their acquisition and diffusion efforts should be backed and complemented by demand oriented policies

sectoral patterns of technical change towards a taxonomy and a theory abstract the purpose of the paper is to describe and explain sectoral patterns of technical change as revealed by data on about 2000 significant innovations in britain since 1945 most technological knowledge turns out not to be information that is generally applicable and easily reproducible but specific to firms and applications cumulative in development and varied amongst sectors in source and direction innovating firms principally in electronics and chemicals are relatively big and they develop innovations over a wide range of specific product groups within their principal sector but relatively few outside firms principally in mechanical and instrument engineering are relatively small and specialised and they exist in symbiosis with large firms in scale intensive sectors like metal manufacture and vehicles who make a significant contribution to their own process technology in textile firms on the other hand most process innovations come from suppliers these characteristics and variations can be classified in a three part taxonomy based on firms 1 supplier dominated 2 production intensive 3 science based they can be explained by sources of technology requirements of users and possibilities for appropriation this explanation has implications for our understanding of the sources and directions of technical change firms diversification behaviour the dynamic relationship between technology and industrial structure and the formation of technological skills and advantages at the level of the firm the region and the country

the intertemporal dimension of neoclassical production theory abstract the aim of this survey paper is to provide a guide to the literature on optimal dynamic factor demands to the non specialist reader interested in applied work we start with the distinction between variable and quasi fixed factors of production and use these to characterize the firm s temporary equilibrium we then review the optimal intertemporal behaviour of the firm using the notion of adjustment costs as a means to solve the firm s optimization problem this process gives rise to a system of interrelated dynamic factor demands in a flexible accelerator format theoretical difficulties and empirical limitations of this model are discussed this fact leads us to review the theory of intertemporal duality we next analyze the issue of expectations in this class of dynamic models a section reviewing the empirical work on dynamic factor demands follows after which we offer some concluding remarks

quasi fixed inputs in u s and japanese manufacturing a generalized leontief restricted cost function approach in this paper a generalized leontief variable cost function is develope d which permits analytical derivation of steady state levels of quasi fixed inputs and capacity output and does not require specification of a numeraire input this framework is then used to evaluate the fa ctor demand patterns of japanese and u s manufacturing based on bot h one quasi fixed capital input and two quasi fixed capital and la bor input specifications and both static and dynamic optimization t he findings provide evidence of considerable flexibility of demand re sponses in japan which may have contributed to japan s relatively st rong economic performance in the volatile 1970s copyright 1988 by mit press

dynamic factor demand equations in u s and canadian agriculture abstract this research provides one of the first empirical estimates of a data based dynamic factor demand model for american and canadian agriculture models such as these deserve more widespread use in the empirical analysis of agriculture these models have the advantage that they do not impose inappropriate dynamics on the data rather they permit the data to select the appropriate dynamics we use a model originally developed by anderson and blundell this model is a general first order dynamic model which contains as testable hypothesis several simpler models this model permits us to estimate the long run agricultural production structure as a subset of the dynamic parameter estimates we will test this long run structure for symmetry homotheticity and neutral technical change the estimated models may be used to test for three alternative dynamic structures in the limit dynamics may not be needed and we can test for the static long run equilibrium model two intermediate cases are the autoregressive and the partial adjustment models which are simpler than the general model but still include dynamics our results suggest that the long run equilibrium model is unsatisfactory in both countries a dynamic model is needed in both countries the two more restricted dynamic models are rejected the general dynamic model is required in canada the long run equilibrium structure is homothetic with neutral technical change in the united states homotheticity is also accepted but neutral technical change is rejected

recursive factor of production interrelations and endogenous cycling a multivariate linear rational expectations equilibrium version of the lucas prescott investment model is developed to study the behavior of factors of productions with recursive interrelations the connection between these interrelations and endogenous cycling is established in a testable way maximum likelihood estimates using annual postwar aggregate u s manufacturing data provide strong evidence of capital labor interrelations that induce a labor overshooting type of endogenous cycling this raises questions for the methodology of current real business cycle models which rule out the possibility of such interrelations copyright 1991 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

rebound directed technological change and aggregate demand for energy abstract we analyse the long run role of energy in aggregate production the factor share of energy has been remarkably constant despite the relative decline in the price of energy we analyse possible explanations for this observation ruling out the idea that endogenous directed technological change has led to a failure of energy augmenting technology to keep pace with labour augmenting technology instead we propose a model in which a combination of income and substitution effects has driven both shifts in consumption patterns towards existing energy intensive goods and the emergence of new such goods

expectations and factor demand this paper develops and estimates a model of interrelated factor demand with rational expectations in the presence of internal adjustment costs invariant technological parameters are distinguished from the firm s adjustment parameters which change when the exogenous processes faced by the firm change the capital demand equation is derived by solving the euler equations which stem from minimization of the present value of costs future exogenous variables are supplied from solutions of arima equations the model is tested on postwar quarterly data for u s manufacturing a regime change in the process for energy prices is simulated as is a temporary suspension of the investment tax credit

real flexibility and financial structure an empirical analysis i examine the empirical relation between real flexibility and financial structure i test whether real flexibility increases debt capacity by lowering default risk and making assets more marketable or decreases debt capacity by facilitating risk shifting and asset substitution i measure real flexibility as the sensitivity of marginal production and investment decisions to variations in the economic environment i find that financial leverage is negatively related to production flexibility but positively related to investment flexibility this split in results suggests that although asset substitution facilitated by investment flexibility can be prevented contractually risk shifting facilitated by production flexibility is intractable copyright 2003 oxford university press

factor substitution in u s manufacturing does plant size matter we use micro data for 10 412 u s manufacturing plants to estimate the degrees of factor substitution by industry and by plant size we find that 1 capital labor energy and materials are substitutes in production and 2 the degrees of substitution among inputs are quite similar across plant sizes in a majority of industries two important implications of these findings are that 1 small plants are typically as flexible as large plants in factor substitution consequently economic policies such energy conservation policies that result in rising energy prices would not cause negative effects on either large or small u s manufacturing plants and 2 since energy and capital are found to be substitutes the 1973 energy crisis is unlikely to be a significant factor contributing to the post 1973 productivity slowdown

new firms and rural industrialization in east anglia gould a and keeble d 1984 new firms and rural industrialization in east anglia reg studies 18 189 201 the paper analyses key aspects of the formation of new independent manufacturing firms in east anglia between 1971 and 1981 special attention is paid to trends in formation rates over time to the spatial bias of new firm origins towards both rural areas and the cambridge region and to the location character and impact of high technology new firms original findings include the contention that spatial variations chiefly reflect variation in the occupational structure of the resident workforce together with industrial mix plant size and previous industrial immigration some implications for government policy to new firms are discussed

an alternative test of the hedonic theory of housing markets abstract in this paper the hedonic theory of housing markets is used to generate a multinomial logit model of household behavior in an urban housing market application of hedonic theory to housing markets is by now fairly familiar and a link to multinomial logit has also been established however by emphasizing more heavily the bid price interpretation of hedonic theory this paper develops a new connection to econometric estimation that essentially involves running the usual logit equations in reverse one advantage of this approach is that the link between the logit equations and hedonic theory involves bid price rather than utility functions and this in turn permits the empirical results to be given an extremely clear interpretation furthermore in contrast to the standard logit model the extreme value distribution required to justify the estimation technique emerges endogenously as part of the analysis

determinants of canadian headship rates this article shows how regional differences in household formation relate to differences in income and housing prices it presents an assessment of the effect of housing prices and income expectations on household formation decisions gender differences are revealed differences between spatial and temporal variation in headship rate changes are illustrated along with the inappropriateness of using coefficients obtained through cross sectional analysis in forecasting exercises or impact assessments normative conclusions are developed

dynamic pollution adjusted inefficiency under the by production of bad outputs abstract this article extends the by production model to the dynamic context of adjustment costs associated with investment the empirical application focuses on panel data of french suckler cow farms over the period 1978 2014 considering emissions of greenhouse gases as bad output the paper estimates input and output specific technical inefficiency scores in the dynamic context and compares them with efficiency measures from the conventional static context our results reveal significant differences between inefficiency scores derived from the static and the dynamic frameworks for all variables except meat production the good output the inefficiency score is lower in the dynamic context than in the static context

energy price energy efficiency and capital productivity empirical investigations and policy implications abstract the immediate effect of carbon pricing policy is to raise energy costs which in turn reduces energy consumption either through induced capital under utilization or investments in new energy efficient capital the latter mechanism which implies improvements in energy efficiency is realized in the long run while the former which has implications for capital productivity tends to occur in the short run we employ panel vector autoregressions as well as co integration and error correction techniques to identify these short and long run relationships including their differences across canadian industries

dynamic factor demand systems and the adjustment speed towards equilibrium most models of factor demand can be grouped into two categories the first is static models which consistently account for substitution among several factors without imposing a priori restrictions on the production structure such models utilize flexible functional forms to represent the underlying technology however they impose strict restrictions on the dynamic behaviour of the technology in that either full or partial static equilibrium is assumed studies in this group providing a rationale for modelling some input factors as fixed in the short run include brown and christensen 1980 and kulatilaka 1985 a partly dynamic approach was suggested by pindyck and rotemberg 1983 who explicitly model the adjustment costs of some factors however the underlying production technology is still regarded as static the second category consists of dynamic models that incorporate cost of capital stock adjustments such models often apply a single factor and typically impose ad hoc assumptions in both categories the researcher selects the inputs which are not regarded as completely variable mostly on the basis of a priori assumptions in this paper we will focus on implications of a dynamic modelling of factor demand systems it is clear that a firm will adjust to price changes only when it is profitable to do so accordingly the cost of adjustment may serve as a rationale for why different factors may adjust towards equilibrium at different speeds hence when we are able to model the adjustment speed of the different factors we are also able to parametrically test for the

investment under uncertainty and dynamic adjustment in the finnish pork industry bykyosti s pietola and robert j myersmay 1998paper prepared for a selected paper session at the annual meeting of the american agriculturaleconomics association salt lake city utah august 1998 this research was financed jointly byagricultural economics research institute in finland the academy of finland and the finnishcultural foundation we also knowledge the michigan agricultural experiment station for itssupport of this research authors are agricultural economist agricultural economics research institute helsinki finland and associate professor department of agricultural economics michigan state university eastlansing copyright 1998 by kyosti s pietola and robert j myers all rights reserved readers may makeverbatim copies of this document for non commercial purposes by any means provided that thiscopyright notice appears on all such copies

short and long term equilibria relationships between first and third generation dynamic factor demand models abstract first generation dynamic models of input demands are theoretically inferior to third generation models yet their simplicity makes them attractive for estimation purposes moreover first generation models can be shown to be generically related to third generation models and under certain assumptions input demand expressions in a third generation model collapse to those of the first generation seemingly offering a short cut for estimation however empirical comparisons suggest that first generation specifications do not afford a reasonable approximation to input functions embedded in more complex third generation models furthermore the reduced form coefficients do not permit identification of third generation model structures

growth pattern of academic entrepreneurial firms abstract academic entrepreneurship the creation of new business ventures by university professors technicians or students is increasingly being promoted by university based innovation centers and university business offices it is seen as an efficient university industry technology transfer mechanism and in some cases may contribute to university revenue whereas most entrepreneurs leave the university at time of start up others keep their academic postings as full time or part time professors part time entrepreneurship may be interesting from a university point of view because i it keeps in the laboratory a creative individual ii it may provide through part time academic positions for a more efficient use of university resources and iii it encourages more contacts between faculty students and the business world however manufacturing firms led by part time entrepreneurs do not seem to be as aggressive and growth oriented as independent firms the university professor interested in the successful transposition of an idea an invention to the commercial sector may therefore have to do it through licensing or resign from the university to devote all his time and energy to the development manufacturing and commercialization process and the university interested in investing in a new academic firm created to exploit commercially an invention made in its own laboratories should beware of keeping the academic entrepreneur on staff or if he stays on staff of involving him with the management of the new company these are the main conclusions of a study of the evolution from 1980 1981 to 1984 1985 of 38 young firms originally created by entrepreneurs while at various universities in several canadian provinces the results supported by the observation of a small control group of 8 canadian hightechnology companies bring out a dichotomy for firms offering technical services the continued this project were made by colleen bigelow and branko peterman their help was greatly appreciated academic posting of the firm s creator does not appear to overly affect its operations and growth however manufacturing firms completely independent from the university tend to g row faster other results support the negative correlation that seems to exist between the growth rate of sales and closeness to academic life as measured for example by the use of university laboratories and equipment whether they are still closely connected to a university or not the entrepreneurs in our sample do note many potential positive benefits from continuing contacts with the academic world it is possible that the negative correlation between growth and university links observed in the sample results more from the individual characteristics of the entrepreneurs than from a negative influence by the university as venture capitalists have long noticed one of the main determinants of growth and success is the entrepreneur himself the entrepreneurs staying close to the university and using university services may be less aggressive and less risk oriented than the others

liberalisation consumption heterogeneity and the dynamics of energy prices in this study the methodology var and the cointegration analysis are used to examine the dynamic interaction among the energy prices of the competitor energy sources in a liberalised market data from the uk market were applied and models for the residential and industrial sectors were developed our results indicate the existence of long run relationships between the energy prices before and after the liberalisation implying the possibility of substitution among the different forms of energy however the results appear to be also largely influenced by external variables not included in the models that may be reducing the importance of the energy prices over their own evolution and offsetting the basic substitution relationships the general results of the impulse response functions both for the residential and industrial sectors present low statistical significance which seems to be due to the still slow rate of adjustment of the energy market to price changes along with the immaturity of the liberalisation process taking into consideration the results some routes for future research are pointed out namely the need to include in the analysis variables which would proxy the general state of the economy

structural models of dynamic factor demands with nonstatic expectations an empirical assessment of alternative expectations specifications until recently little literature existed on incorporation of nonstatic price and output expectations into empirically implementable factor demand models for example the vast literature on flexible functional forms is almost completely characterized by static expectations on prices and output as well as instantaneous adjustment to desired levels of demand more recent studies have incorporated increasingly complex theoretical and econometric structures the literature along the lines of fuss 1976 and berndt fuss and waverman 1979 bfw incorporates endogenous determination of dynamic adjustment structure but retains a static expectations assumption on the other hand most current rational expectations models following the lead of thomas sargent and robert lucas make very restrictive simplifying assumptions on the deterministic economic structure in order rigorously to specify the complex stochastic structure implied by the rational expectations assumption a thrid category of model represented by pindyck and rotemberg 1983 relies on an instrumental variable approach to ensure error orthogonality and hence consistency with the rational expectations assumption this procedure allows for a more complete structural specification but does not explicitly incorporate an expectations process this paper represents a step toward a synthesis of the structural and stochastic approaches to dynamic input demand modeling with emphasis on both theoretical foundations and empirical tractability in this approach approximations to rational expectations and certainty equivalence are used explicitly to incorporate anticipatory behavior of firms into the structural model of dynamic factor demands theoretically this is accomplished without sacrificing rich economic structure a structural factor demand model is developed which includes both stock relationships and expectations formation based on an explicit dynamic optimization framework empirically the focus is on avoiding complex stochastic structures that are of little use to most empirical researchers all of the expectational models are empirically straightforward to implement and yet incorporate the important theoretical and empirical structure required for detailed analysis of short and long run behavior two issues must be addressed to formalize and implement the model the

the own wage elasticity of labor demand a meta regression analysis firms labor demand responses to wage changes are of key interest in empirical research and policy analysis however despite extensive research estimates of labor demand elasticities remain subject to considerable heterogeneity in this paper we conduct a comprehensive meta regression analysis to re assess the empirical literature on labor demand elasticities building on 942 elasticity estimates from 105 different studies we identify sources of variation in the absolute value of this elasticity heterogeneity due to the theoretical and empirical specification of the labor demand model different datasets used or sectors and countries considered explains more than 80 of the variation in the estimates we further find substantial evidence for the presence of publication selection bias as estimates of the own wage elasticity of labor demand are upwardly inflated

cost specification and firm behaviour in a hotelling model of resource extraction in applied resource economics much attention has been focused on the ability of the hotelling model to explain observed firm behavior in this paper a preliminary specification search is performed to determine the appropriate cost function parameterization for the firms in the sample before proceeding to the estimation of the euler equation once a cost function specification is chosen the corresponding euler equation is estimated via the generalization method of moments gmm which allows for better estimates of the euler equations than in previous studies even with the preliminary specification search and the use of gmm estimation the behavior of the panel of fourteen canadian copper mining firms in the data set examined does not seem to be consistent with the basic hotelling model used

a dynamic adjustment model for u s agriculture 1948 79 abstract a multioutput model is developed within the adjustment cost framework to analyze the structure of dynamic adjustments in u s agriculture during the post war period an important feature of this model is that the econometric model is consistent with dynamic economic theory fluctuations in capital stocks variable inputs and outputs are explained by changing opportunity costs empirical results indicated that durable equipment farm produced durables and family labor exhibited significant rigidity in adjustment as a response to exogenous shocks surprisingly the hypothesis that real estate was a variable input could not be rejected the univariate flexible accelerator hypothesis which is widely maintained in most agricultural adjustment studies is inconsistent with the data

an econometric analysis of fluctuations in aggregate labor supply and demand the paper contains a simple equilibrium model of the labor market the supply function allows for intertemporal substitution in response to real wage fluctuations and the demand function allows for adjustment costs on employment the supply and demand functions both solve quadratic partial adjustment problems driven by rational expectations about future real wages the market equilibrium also solves a partial adjustment problem driven by rational expectations about future preference and technology shocks two related issues are emphasized the identification of dynamic labor supply and demand functions and the theoretical interpretation of serial correlation in employment and real wages when the supply and demand shocks are assumed to be ar 1 processes which are not causally related the model delivers a simple structure for the equilibrium process for employment and real wages which is a restricted var 2 this simple structure facilitates the interpretation of summary statistics on the time series properties of observed employment and real wage series the supply and demand functions can both be locally identified using only employment and real wage data an illustrative application is presented using u s manufacturing data for the period 1948 1971

an adjustment cost model of long term employment in japan summary a dynamic factor demand model is presented which pays special attention to the prevalence of a longterm employment relationship in japan the model is based on the representation of technology by a variable cost function with adjustment costs for employment and capital stock where the variable cost consists of the sum of overtime costs and materials costs with employment being quasi fixed and scheduled hours institutionally regulated short run adjustments are mostly made by overtime hours application to a time series data on the japanese electrical machinery industry indicates quasi fixity of capital and employment and reproduces short run overshooting of overtime hours to compensate for the sluggish adjustment of employment

capacity utilization and depreciation in use in this paper the effect capacity utilization has on the depreciation of capital goods is studied starting from a quadratic approximation to a normalized short run cost function expressions for the optimal rate of capacity utilization the demands for labour and energy and for investment are obtained investment is a function of past capital stock expected future capital stock expected future relative prices and expected future depreciation rates expectations are modelled via instruments the model is tested using us total manufacturing quarterly data depreciation dependent upon usage is found to be both statistically and economically significant

on discrete choice models of housing demand abstract this paper explores several specifications of discrete choice models in estimating housing consumption for purposes of projection and policy simulation we view housing consumption comprehensively as it includes the choice between three types of homeownership five types of rented housing and as a ninth alternative not heading a household the familiar multinomial logit specification is rejected by several specification tests the paper therefore studies a variety of nested multinomial logit models of hierarchical choice that allow a richer substitution pattern among the very disparate housing choices enumerated above estimations of different nesting structures reveal strong and plausible differences among nesting structures

inventories employment and hours abstract this paper develops a model that integrates inventory and labor decisions we extend a model of inventory behavior to include a detailed specification of the role of labor input in the production process distinguishing between employment hours and effort per worker we estimate jointly the euler equations for inventories and employment a labor compensation schedule and an hours requirement function with the cross equation restrictions imposed the econometric results shed light on several important topics including the shape of the marginal cost of output the role of labor hoarding as an explanation of pro cyclical productivity and the persistence of inventory stocks

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

technical efficiency and u s manufacturing productivity growth this paper establishes that new inputs increase technical efficiency levels for u s manufacturing over the period 1950 1998 intermediate inputs exhibited higher rates of efficiency growth than labor and capital efficiency adjusted productivity growth annually averaged 0 4 percentage points above measured growth the gap between efficiency adjusted and measured productivity growth arises from aggregating inputs using observed and not efficiency adjusted cost share weights in the calculation of measured growth specifically the decline in efficiency adjusted material cost shares compared to the measured shares coupled with the comparatively high material input growth rate was the main source of the productivity gap

misleading comparisons of homeownership rates when the variable effect of household formation is ignored explaining rising homeownership and the homeownership gap between blacks and asians in the us despite ominous signs of housing market stress in the us the homeownership rate reached an all time high in 2006 the conventional definition of homeownership which is based on the share of households and ignores the effects of variable household formation confounds the measurement of success in achieving homeownership it is found that from 1990 to 2006 declining household formation led to an elevated homeownership rate in the us and that this effect varies substantially between racial ethnic groups asians who achieve high homeownership rates have the lowest propensity to form independent households in sharp contrast to african americans asians do not have better access per capita to owner occupied housing than do blacks the conventional measure of homeownership is an incomplete measure of homeownership opportunity because it fails to account for variable household formation the changing population mix in the us includes groups with different propensities for household formation thus confusing future assessments of homeownership and the housing market

dynamic factor demands and market structure under rational expectations some estimates for the italian manufacturing system this paper deals with a dynamic model of the behaviour of firms under rational expectations the adjustment cost framework is followed to describe production technologies the objective of firms is to maximize the stream of future profits under rational expectation first order conditions for the optimum are derived with respect to input demands and one output supply the output market structure is modelled in order to test price taking behaviour the adjustment costs of quasi fixed inputs are internal and interrelated the model is estimated for the italian manufacturing system with encouraging results

location choice and labour market perceptions a discrete choice study henley a carruth a thomas a and vickerman r 1989 location choice and labour market perceptions a discrete choice study reg studies 23 431 445 the location of industry in an economy raises many important issues for economists and governments interested in economic efficiency and equity one interesting question is whether economic factors have an important role to play in explaining location patterns this paper uses a survey data set of uk establishments in growth activities it implements a discrete choice framework to contrast the performance of economic variables with that of establishments perceptions about these economic conditions in explaining location choice henley a carruth a thomas a et vickerman r 1989 le choix de localisation et les perceptions du marche de l emploi une etude par choix discret reg studies 23 431 445 dans une economie la localisation de l industrie souleve de nombreuses questions importantes a la fois pour les economistes et pour les gouvernements qu

dynamic adjustment in us agriculture under climate change we construct a stochastic dynamic dual model to investigate the structural adjustment of two aggregate output and three aggregate input categories in us agriculture under stochastic climatic change more than a century of national annual data 1910 2011 is used in the empirical analysis no constraints on asset fixity are imposed results indicate that with rational expectations both output categories as well as all input categories exhibit quasi fixity in response to market change and stochastic climate change crops adjust more than twice as fast as livestock 49 versus 20 of the way toward their long run equilibrium in one year fertilizer adjusts most rapidly toward equilibrium levels 88 in one year and capital adjusts most slowly 5 in one year labor oscillates rather than converging smoothly toward equilibrium its distance from equilibrium is the same as if it adjusted 59 of the way toward its optimal level in one year failing to anticipate climate change dramatically slows the estimated rate of adjustment for two netputs and modestly speeds the rate for two others thus likely increasing overall adjustment costs failing to account for uncertainty in anticipated climate change has little impact on adjustment rates

consistent tariffs with dynamic supply response abstract this paper models a large importer of a competitively produced good for which there are nonlinear adjustment costs in production if producers have rational expectations and the importer is unable to make a credible commitment regarding future tariffs market power may be disadvantageous this is more likely to occur when the difference between short and long run elasticities of supply are large this result depends on the particular subgame perfect equilibrium that is chosen if producers were capable of strategic behavior other equilibria which rely on trigger strategies would be reasonable and market power could no longer be disadvantageous

dynamic factor demands under rational expectations we model the industrial demands for structures equipment and blue and white collar labor in a manner consistent with rational expectations and stochastic dynamic optimization in the presence of adjustment costs but allowing generality of functional form we represent the technology by a translog input requirement function that specifies the amount of blue collar labor needed to produce an output level given quantities of three quasi fixed factors nonproduction workers equipment and structures a complete description of the production structure is obtained by simultaneously estimating the input requirement function and three stochastic euler equations we find adjustment costs are small in total but large on the margin and differ considerably across factors

estimating dynamic dual models under nonstatic expectations in this paper we derive a system of equations depicting agents dynamic decision rules under nonstatic price expectations based on the adjustment cost model of the firm the integrability conditions which can serve to guide the specification of flexible functional forms are established a two stage econometric model permitting empirical examination of both the expectations formation process and the dynamic structure of the industry is estimated using two different data series for u s production agriculture the estimation results suggest evidence of the presence of nonstatic price expectations in dynamic dual models for u s production agriculture

price and inventory dynamics in petroleum product markets abstract unlike many studies of commodity inventory behavior this paper estimates a model with endogenous spot and forward prices inventories production and net imports our application involves markets for refined petroleum products in the united states our model is built around the supply and demand for storage we estimate the model using generalized method of moments and perform dynamic simultaneous simulations to estimate the impacts of supply and demand shocks supply curves for the industry are inelastic and upward sloping high inventory levels depress prices inventories fall in response to higher sales consistent with production smoothing under higher input prices refiners reduce their stocks of crude oil but increase their product inventories consistent with cost smoothing in some cases imports of products are more variable than production or inventories

adjustment cost and supply response in a fishery a dynamic revenue function in industries where firms can adjust product mix in response to price changes the process can be delayed by adjustment costs an example is fishermen who change fishing grounds to target different species if adjustment costs are sufficiently large this may hamper the fishermen s response so that regulatory tools that are not efficient in the long run are useful in the short run moreover adjustment costs can influence the choice of species targeted in this paper dynamic supply equations are specified using a revenue function approach different hypotheses about the dynamics of the supply equations are tested for norwegian trawlers

assessing a disaggregated energy input using confidence intervals around translog elasticity estimates the role of energy in the production of manufacturing output has been debated extensively in the literature particularly its relationship with capital and labor in an attempt to provide some clarification in this debate a two step methodology was used first under the assumption of a five factor production function specification we distinguished between electric and non electric energy and assessed each component s relationship with capital and labor second we calculated both the allen and price elasticities and constructed 95 confidence intervals around these values our approach led to the following conclusions that the disaggregation of the energy input into electric and non electric energy is justified that capital and electric energy and capital and non electric energy are substitutes while labor and electric energy and labor and non electric energy are complements in production and that capital and energy are substitutes while labor and energy are complements

monetary policy response to oil price shocks how should monetary authorities react to an oil price shock this paper shows that in a noncompetitive economy policies that perfectly stabilize prices entail large welfare costs hence explaining the reluctance of policymakers to enforce them the policy trade off is nontrivial because oil energy is an input to both production and consumption as welfare maximizing policies are hard to implement and communicate i derive a simple interest rate rule that depends only on observables but mimics the optimal plan in all dimensions the optimal rule is hard on core inflation but accommodates oil price changes

atomistic and systemic approaches to research on new technology based firms a literature study the dominating view of new technology based firms is that these firms are driven by a heroic entrepreneur who pursues aggressive growth new technology based firms are expected to sooner or later develop tangible products with which new market niches are created and existing ones penetrated often the only perceived economic impact of new technology based firms is one delivered through rapid organic growth

networks and innovation in a modular system lessons from the microcomputer and stereo component industries in this paper we examine theoretically and through case studies the phenomenon of the modular system which we distinguish from a product conceived of as a prepackaged entity or appliance we argue that such systems offer benefits on both the demand side and the supply side supply side benefits include the potential for autonomous innovation which is driven by the division of labor and provides the opportunity for rapid trial and error learning demand side benefits include the ability to fine tune the product to consumer needs and therefore blanket the product space more completely both of our case studies suggest that innovation in a modular system can lead to vertical and horizontal disintegration as firms can often best appropriate the rents of innovation by opening their technology to an outside network of competing and cooperating firms we conclude by speculating on the increased importance of modular systems in the future since flexible manufacturing and rising incomes are likely to increase the driving requisites of modular systems low economies of scale in assembly and sophisticated consumer tastes

energy transition under irreversibility a two sector approach in this paper we analyze the optimal energy transition of a two sector economy energy and final goods with exhaustible oil reserves a renewable source of energy and a pollution threat the latter corresponds to a pollution threshold above which a part of the capital is lost following flooding for instance we show that the optimal energy transition path may correspond to a corner regime in which the economy starts using both resources then crosses the pollution threshold and therefore loses a part of its capital at the end the sole adoption of the renewable energy is optimal only in the long run this result is in line with the asymptotic energy transition arguments stating that the transition to clean energy may happen only in the long run we also show that economy reduces the use of energy resource as long as the productivity of capital and energy services is high therefore public policies should promote investments in energy innovation that targets productive sector home appliances and buildings and helps to save both money and energy we extend the present model to allow for additional investment in energy saving technologies our main results show that this additional investment favours the energy transition in the sense that it increases the time within which the economy may experience the catastrophe and the welfare of the society for policy implications economic instruments such as taxes on dirty energy subsidies on clean energy or incentives for energy saving technologies need to be implemented in order to promote the energy transition this is particularly important for developing countries that mostly rely on polluting energy resources and are the most vulnerable to climate change but those economic instruments should be carefully designed in line with the asymptotic energy transition result

financial structure production and productivity evidence from the u s food manufacturing industry this study integrates production and financing to examine the impacts of financial structure change on the production profitability and productivity growth in the u s food manufacturing industry empirical results show that during the period covered by this study agency cost associated with increased debt use by this industry negatively affected its output growth input demand profitability and overall productivity growth dividend payment positively contributed to the production and performance of this industry via signaling benefit however the negative effects of increased debt use by this industry far outweighed the positive contribution of dividend payment the u s food industry achieved a 0 9 average annual productivity growth which came primarily from technological progress and capital adjustment the rapid increase in debt use by this industry was responsible for slowing down the pace of productivity growth via its negative contribution to the total factor productivity growth capital expansion was the principal driver of output growth and profitability in this industry

interrelated factor demands for manufacturing a dynamic translog cost function approach abstract in this paper we report the results of estimating a joint model for labour capital and energy using the transcendental logarithmic cost function of christensen jorgenson and lau 1973 this allows us to determine both the own price and cross elasticities of substitution between labour capital and energy we combine a model of factor shares with a dynamic adjustment process for each factor we also impose on the cross equation restrictions necessary to provide additivity homogeneity and symmetry since the covariance matrix in systems of share relationships is singular we follow the suggestions of anderson and blundell 1982 and employ a mullivariate error corrrection model the results suggest that additivity symmetry and homogeneity restrictions do hold and that there are short run increasing returns to scale

discrete choice modelling of urban housing markets a critical review and an application the housing choice literature is a vast area of housing research which has resulted in giant leaps forward in recent years in terms of its econometric modelling this is due in large part to the significant increases now available in computing power allowing researchers to combine the latest advances in theory with empirical application this paper brings together and critically reviews the housing choice literature and techniques that have been used to model the household s housing choice decision the basic multinomial logit model is reviewed alongside the more recent advances in discrete choice modelling the nested multinomial logit model and the heteroscedastic extreme value model the various techniques are illustrated using data from the australian census of 1986 and 1996 to model housing choice in sydney the results show that careful consideration must be given to the assumptions underlying any chosen modelling technique if one is not to draw misleading conclusions from the analysis

how do banks adjust to changing input prices a dynamic analysis of u s commercial banks before and after the crisis abstract the 2000 2013 period was characterized by substantial regulatory monetary and technological change especially after the onset of the global financial crisis this study assesses the total impact of these policy shifts and technological changes on u s commercial banks short run and long run substitution elasticities an endogenous break test divides the sample into a pre crisis period and a post crisis period during the former period banks inputs tend to be inelastic substitutes after the onset of the crisis particularly the long run substitutability of most input factors decreases to even lower levels due to changes in both cost technology and economic conditions at the same time banks response to input price changes becomes more sluggish hence especially after the onset of the crisis banks have little flexibility regarding input factor usage and are thus sensitive to input price changes from a cost perspective

the housing ladder the housing life cycle and the housing life course upward and downward movement among repeat home buyers in a us metropolitan housing market this research models us home owners decisions to move up or down in price the models are based on three common conceptualisations the housing ladder the housing life cycle and the housing life

joint choice of tenure and dwelling type a multinomial logit analysis for the city of chongju this paper explores the plausible variables that influence choices in the chongju housing market a joint model of tenure and dwelling type is estimated within the multinomial logit framework the