TY  - JOUR
AU  - Shapiro,Matthew D.
TI  - The Dynamic Demand for Capital and Labor
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1899
PY  - 1987
Y2  - May 1987
UR  - http://www.nber.org/papers/w1899
L1  - http://www.nber.org/papers/w1899.pdf
N1  - Author contact info:
Matthew D. Shapiro
Department of Economics
University of Michigan
611 Tappan St
Ann Arbor, MI 48109-1220
Tel: 734/764-5419
Fax: 734 764-2769
E-Mail: shapiro@umich.edu
AB  - A model of the dynamically interrelated demand for capital and labor is specified and estimated. The estimates are of the first-order conditions of the firm's problem rather than of the closed-form decision rules. This use of the first-order conditions allows a random rate of return and a flexible specification of the technology. The estimates do not imply the very slow rates of adjustment displayed in other, related estimates of the demand for capital. Because adjustment is estimated to be rapid, there is,contrary to the standard view, scope for factor-prices to affect investment at relatively high frequencies.
ER  -