Adjustment Costs in Factor Demand

Daniel Hamermesh and Gerard Pfann

No 1371, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This study discusses the nature of adjustment costs, which underpin the dynamic theory of input demand. We examine the implications of the conventional assumption that they are quadratic-symmetric. A recent rapidly-growing literature based on microeconomic data shows that this assumption is inferior to many alternatives. We demonstrate the importance of this new knowledge for predicting macroeconomic fluctuations in employment and investment. We indicate its relevance for constructing general equilibrium simulation models, drawing inferences about the likely impacts of labour market and investment policies, and analysing firms’ dynamic behaviour in factor markets.

Keywords: Behaviour; Dynamic; Firm; Individual (search for similar items in EconPapers)
JEL-codes: D21 J23 (search for similar items in EconPapers)
Date: 1996-05
References: Add references at CitEc
Citations: View citations in EconPapers (497)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=1371 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Adjustment Costs in Factor Demand (1996)
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:cpr:ceprdp:1371

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... ers/dp.php?dpno=1371

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().