Asymmetric Adjustment Costs, Asymmetric Pricing and Employment: Evidence from the UK

R. Arden, Sean Holly and Paul Turner (p.m.turner@lboro.ac.uk)

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: This paper uses an asymmetric multivariate model to investigate asymmetries in employment and pricing behaviour by firms. This generalises the approach of Granger and Lee (1989) and also exploits the cross-equation restrictions on the equations for prices and employment implied by a restricted cost function - the dual to a Cobb-Douglas production function. The results suggest that both prices and employment respond asymmetrically to shocks to costs and demand.

Date: 1997-06
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Journal Article: Asymmetric Adjustment Costs, Asymmetric Pricing and Employment: Evidence from the UK (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:cam:camdae:9717

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