RT Journal Article
T1 Input cost, capacity utilization and substitution in the short run
A1 Delgado, Miguel A.
A1 Jaumandreu, Jordi
A1 Martín Marcos, Ana
AB This article studies the behavior of input cost shares in an environment where labor is costly to adjust, materials can be adjusted at no cost and capital is fixed. A model relating cost shares with relative prices and adjustment costs is proposed, allowing joint estimation of the elasticity of substitution and the adjustment cost function, which is an unknown function of the capacity utilization. Based on a panel of more than 700 manufacturing firms, we find evidence of strong input share variations according to the degree of capacity utilization. The estimated shapes of adjustment costs curves of labor are in agreement with our theoretical model, and we obtain sensible elasticities of substitution estimates. Based on such estimates, we find evidence of a negative (positive) bias in downturns (recoveries) in conventional productivity growth measures.
PB Springer
SN 1435-5477
YR 1999
FD 1999
LK https://hdl.handle.net/10016/2444
UL https://hdl.handle.net/10016/2444
LA eng
DS e-Archivo
RD 20 may. 2024