TY - JOUR
T1 - R&D, production structure and rates of return in the U.S., Japanese and German manufacturing sectors
T2 - A non-separable dynamic factor demand model
AU - Mohnen, Pierre A.
AU - Nadiri, M. Ishaq
AU - Prucha, Ingmar R.
N1 - Funding Information:
*This study is an extension of an earlier paper of ours which assumed separability in the quasi-fixed factors and also considered a somewhat different set of variable inputs. That paper was presented at the Conference on Quantitative Studies on Research and Development in Industry, Paris, September 1983. We thank the participants of that conference for helpful discussions. We would also like to thank the editor and two referees of this journal for very helpful comments. We retain, however, full responsibility for any shortcomings. The fmancial support of the National Science Foundation, Grant PRA-8108635, and the Research Board of the Graduate School of the University of Maryland is gratefully acknowledged. We would also like to thank the computer centers of New York University and the University of Maryland for their support with computer time. Similar studies on other European countries are currently underway involving the authors and professor Angelo Cardani.
PY - 1986/8
Y1 - 1986/8
N2 - The focus of this paper is an analysis of the production structure, the demand for factor inputs, and the rates of return in the manufacturing sector of three major industrialized countries, the United States, Japan and Germany. The analysis is based on a dynamic factor demand model with two variable inputs, labor and materials, and two quasi-fixed inputs, capital and R&D. Adjustment costs are explicitly specified. The demand equations are derived from an intertemporal cost-minimization problem formulated in discrete time. The adopted estimation methodology allows for non-separability in the quasi-fixed factors. The model is estimated using data from 1965-1966 to 1977-1978. Particular attention is given to the role of R&D. For all countries the rate of return on R&D is found to be higher than that of capital. Their respective magnitudes are similar across countries. Considerable differences in the input demand elasticities with respect to output and prices are observed; also, for all countries the speed of adjustment for capital is found to be higher than that for R&D.
AB - The focus of this paper is an analysis of the production structure, the demand for factor inputs, and the rates of return in the manufacturing sector of three major industrialized countries, the United States, Japan and Germany. The analysis is based on a dynamic factor demand model with two variable inputs, labor and materials, and two quasi-fixed inputs, capital and R&D. Adjustment costs are explicitly specified. The demand equations are derived from an intertemporal cost-minimization problem formulated in discrete time. The adopted estimation methodology allows for non-separability in the quasi-fixed factors. The model is estimated using data from 1965-1966 to 1977-1978. Particular attention is given to the role of R&D. For all countries the rate of return on R&D is found to be higher than that of capital. Their respective magnitudes are similar across countries. Considerable differences in the input demand elasticities with respect to output and prices are observed; also, for all countries the speed of adjustment for capital is found to be higher than that for R&D.
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U2 - 10.1016/0014-2921(86)90060-7
DO - 10.1016/0014-2921(86)90060-7
M3 - Article
AN - SCOPUS:0011415099
SN - 0014-2921
VL - 30
SP - 749
EP - 771
JO - European Economic Review
JF - European Economic Review
IS - 4
ER -