Output, Capital, and Labor in the Short, and Long-Run

Daniel Levy ()

Development and Comp Systems from University Library of Munich, Germany

Abstract: Using a new series of capital stock and frequency domain analysis, this paper provides new empirical evidence on the relative importance of capital and labor in the determination of output in the short and long- run. Contrary to the common practice in the traditional growth accounting literature of assigning weights of 0.3 and 0.7 to capital and labor inputs respectively, the evidence presented here suggests that capital is a far more important factor than labor for determination of output at and near the zero frequency band. Furthermore, I show that the zero-frequency labor elasticity of output may well be close to zero, or even zero. Additional findings reported here support the traditional accelerator model of investment as a good description of the long-run investment process.

Keywords: Growth Accounting; Capital Investment; Output Fluctuation; Employment; Business Cycles and Aggregate Fluctuation; Frequency Domain Analysis; Spectrum and Cross-Spectrum; Coherence; Phase Shift; Gain; Zero-Frequency; Capital and Labor Elasticity of Output; Short-Run; Long- Run; Capital's and Labor's Share in Output; Accelerator Model of Investment (search for similar items in EconPapers)
JEL-codes: E22 E24 E32 O47 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2005-05-15
New Economics Papers: this item is included in nep-mac
Note: Type of Document - pdf; pages: 31
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://econwpa.ub.uni-muenchen.de/econ-wp/dev/papers/0505/0505012.pdf (application/pdf)

Related works:
Journal Article: Output, Capital, and Labor in the Short, and Long-Run (1994)
Working Paper: Output, Capital, and Labor in the Short, and Long-Run* (1994)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpdc:0505012

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