UBC Theses and Dissertations
Three essays in the dynamic analysis of demand for factors of production Morrison, Catherine J.
This dissertation consists of three essays focussing on various theoretical extensions and empirical implementations of a model characterizing the dynamic input demand behavior of the firm. The analysis is based on recent developments on optimal investment decisions over time subject to increasing marginal costs of adjustment. Theoretical extensions to the model include the incorporation of (i) monopoly behavior based on profit maximization with both internal and external costs of adjustment on gross investment (Essay 1) and (ii) non-static output and price expectations (Essay 2). Both theoretical models are empirically implemented using annual U.S. manufacturing data, 1948-77. Results from the various specifications can therefore be analyzed and contrasted. Essay 3 consists of an application of the alternative models to measures of capacity utilization specified in terms of the explicit dynamic optimization model of the firm's behavior. Various derivations and interpretations of these measures for alternative theoretical specifications are developed and compared, both analytically and empirically. The three essays are linked by a common structural model which provides a basis for incorporation of different behavioral assumptions, and for examination and comparison of the various models in terms of demand elasticities, cyclical indicators such as multifactor productivity and Tobin's "q", and capacity utilization.
Item Citations and Data