Quasi-fixed inputs and long-run equilibrium in production: a cointegration analysis

H. Youn Kim and Junsoo Lee ()
Additional contact information
H. Youn Kim: Department of Economics, Western Kentucky University, Bowling Green, KY 42101, USA, Postal: Department of Economics, Western Kentucky University, Bowling Green, KY 42101, USA

Journal of Applied Econometrics, 2001, vol. 16, issue 1, 41-57

Abstract: This paper proposes a cointegration approach to testing the validity long-run equilibrium in production, where capital and labour are taken as quasi-fixed inputs. Previous studies consider only capital as the quasi-fixed input and do not take account of the time series properties of the variables, assuming implicitly that they are stationary. The canonical cointegrating regressions (CCR) procedure is employed to test for cointegration in both the single-equation and the seemingly unrelated regressions framework, and long-run equilibrium conditions are tested. The evidence from US manufacturing reveals that capital and labour are not fully adjusted to their long-run optimal values, casting doubt on the long-run equilibrium hypothesis. Copyright © 2001 John Wiley & Sons, Ltd.

Date: 2001
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://qed.econ.queensu.ca:80/jae/2001-v16.1/ Supporting data files and programs (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:jae:japmet:v:16:y:2001:i:1:p:41-57

Ordering information: This journal article can be ordered from
http://www3.intersci ... e.jsp?issn=0883-7252

Access Statistics for this article

Journal of Applied Econometrics is currently edited by M. Hashem Pesaran

More articles in Journal of Applied Econometrics from John Wiley & Sons, Ltd.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and Christopher F. Baum ().