Abstract
This paper deals with the existence of an aggregate adjustment-cost technology that characterizes the feasible intertemporal paths of an aggregate capital stock, an aggregate investment rate and aggregate net outputs. The results indicate that only very restrictive adjustment-cost technologies can be aggregated consistently. Therefore the use of aggregative models cannot be justified by functional structure assumptions except in relatively uninteresting circumstances, so that alternative justifications and interpretations should be investigated.
The research on this paper began while the second author was visiting the Research Department of the Bank of Canada. We thank Larry Epstein and a referee of this journal for comments.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Blackorby, C. & Schworm, W.: Aggregate investment and consistent intertemporal technologies. Review of Economic Studies 49, 595–614, 1982 a.
Blackorby, C. & Schworm, W.: Rationalizing the use of aggregates in natural resource economics. In Economic Theory of Natural Resources (ed. W. Eichhorn et al.), Physica-Verlag, Würzburg, Wien, 1982 b.
Bliss, C.: Capital theory and the distribution of income. North Holland-Elsevier, Amsterdam. New York, 1975.
Diewert, W.: Applications of duality theory. In Frontiers of quantitative economics, 11 (ed. M. Intriligator and D. Kendrick). North Holland, Amsterdam, 1974.
Eisner, R. & Strotz, R.: Determinants of business investment. In Commission on money and credit: Impacts of monetary policy, pp. 60–183. Prentice-Hall, Englewood Cliffs, 1963.
Epstein, L.: Aggregating quasi-fixed factors. The Scandinavian Journal of Economics 85 (2), 191–205, 1983.
Fisher, F.: Embodied technical change and the existence of aggregate capital stock. Review of Economic Studies 35 417–428, 1968 a.
Fisher, F.: Emboided technology and the existence of labour and output aggregates. Review of Economic Studies 35, 391–412, 1968 b.
Gorman, W. Measuring the quantities of fixed factors. In Value, capital and growth (ed. J. Wolfe ). Edinburgh, 1968.
Gorman, W.: Aggregates, activities, and overheads. Technical Report No. 390, IMSSS, Stanford, 1982.
May, K. O.: The aggregation problem for a one-industry model. Econometrica 14, 232–244, 1946.
Nickell, S.: The investment decisions of firms. Nisbet/Cambridge, Cambridge, 1978.
Stigum, D.: On certain problems of aggregation. International Economic Review 8, 1967.
Whitaker, J.: Captial aggregation and optimality conditions. Review of Economic Studies 35, 429–442, 1968.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Copyright information
© 1984 The Scandinavian Journal of Economics
About this chapter
Cite this chapter
Blackorby, C., Schworm, W. (1984). Aggregating Heterogeneous Capital Goods in Adjustment-cost Technologies. In: Førsund, F.R. (eds) Topics in Production Theory. Scandinavian Journal of Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-07123-4_8
Download citation
DOI: https://doi.org/10.1007/978-1-349-07123-4_8
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-07125-8
Online ISBN: 978-1-349-07123-4
eBook Packages: Palgrave Business & Management CollectionBusiness and Management (R0)