Quasi-Fixed Inputs in U.S. and Japanese Manufacturing: A Generalized Leontief Restricted Cost Function Approach

Catherine Morrison Paul

The Review of Economics and Statistics, 1988, vol. 70, issue 2, 275-87

Abstract: 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.

Date: 1988
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