Demand For Factors Of Production Research Articles

Quantification of sectoral impact of COVID-19 on Indian economy: an application of economy-wide accounting framework

PurposeCOVID-19 has affected the economies adversely from all sides. The sudden halt in production has impacted both the supply and demand sides. It calls for analysis to quantify the impact of the reduction in economic activity on the economy-wide variables so that appropriate steps can be taken. This study aims to evaluate the sensitivity of various sectors of the Indian economy to this dual shock.Design/methodology/approachThe eight-sector open economy general equilibrium Global Trade Analysis Project (GTAP) model has been simulated to evaluate the sector-specific effects of a fall in economic activity due to COVID-19. This model uses an economy-wide accounting framework to quantify the impact of a shock on the given equilibrium economy and report the post-simulation new equilibrium values.FindingsThe empirical results state that welfare for the Indian economy falls to the tune of 7.70% due to output shock. Because of demand–supply linkages, it also impacts the inter- and intra-industry flows, demand for factors of production and imports. There is a momentous fall in the demand for factor endowments from all sectors. Among those, the trade-hotel-transport and manufacturing sectors are in the first two positions from the top. The study recommends an immediate revival of the manufacturing and trade-hotel-transport sectors to get the Indian economy back on track.Originality/valueThe present study has modified the existing GTAP model accounting framework through unemployment and output closures to account for the impact of change in sectoral output due to COVID-19 on the level of employment and other macroeconomic variables.

Оценка мультипликативных эффектов в экономике Хабаровского края: влияние на доходы населения

The purpose of the study is to assess the impact of multiplier effects in the economy of the Far-Eastern federal district, generated by exogenous changes, on the household income. The Khabarovsk territory was chosen as a model region, which has a set of geographical, economic, social, including demographic, characteristics typical for the entire line of the Far-Eastern subjects of the Russian Federation. The main research method is a balance structural modeling based on the principles of national accounting methodology. Experimental assessment of the matrix of financial flows of the Khabarovsk territory is carried out, taking into account disaggregation of the household account, namely, distribution of the income by 20% (quintile) groups of population, ranked in ascending order of average per capita income. Using the matrix approach allows not only study systematically financial flows between the institutional units in the region, but also to conduct a quantitative analysis of the multipliers of exogenous aggregate demand, demand for the residents' products, demand for production factors (capital and labor). The time frame of the study covers the 2019-2020 biennium. The scientific interest in this period is explained by an attempt to assess changes in the influence of exogenous factors on the dynamics of incomes of the population, taking into account the effect of external shock in relation to the region - a pandemic caused by the spread of a new coronavirus infection. The obtained estimates identified in numerical terms the relationship between regional socio-economic dynamics and changes in the well-being of the population in the context of its individual income groups. An increase in 2020 relative to 2019 is shown in the sensitivity of household incomes in the region to exogenous changes in gross output and the production factor - labor; decrease - the output of the residents of the region and the factor of production - capital. Income groups that influence the change in the corresponding sensitivity are identified.

ON THE RELATIONSHIP BETWEEN GROSS DOMESTIC PRODUCT AND ENERGY: A CRITICAL COMMENT

GNP and energy. The obvious interest in this relationship is a result of the global interest in reducing the use of energy without impairment of economic growth. Most studies do not have an economic model underlying the statistical models. In the absence of an economic model supporting the estimable equations, the statistical results can be interpreted arbitrarily or they may not have an interpretation that can be theoretically supported. In this paper we attempt to do four things. First, we briefly present the four hypotheses that have been formulated to express the energy-GDP relationship. Second, we argue that the relationship between GDP and energy, as is formulated in two of the hypotheses (the growth hypothesis and the feedback hypothesis), and as is examined in part of this literature, suffers from misspecification, because a decisive factor for the energy market is missing. Third, we use basic economic theory to show how GDP and energy are related on the basis of production theory and derived demand for factors of production, and, fourth, we conclude by suggesting which of the four hypotheses can serve as a meaningful approximation of the relationship. Keywords : GDP-energy nexus, Conservation hypothesis, Growth hypothesis, Feedback hypothesis, Neutrality hypothesis JEL Classifications: Q41, Q43 DOI: https://doi.org/10.32479/ijeep.8418

Intertemporal capital substitution and Hayekian booms

Hayek's business cycle theory portrays monetary expansion and monetary contraction with counterintuitive asymmetry. On the one hand, it suggests that they both change relative prices and cause costly reallocations of production factors. At the same time, the theory predicts that while a monetary contraction causes the economic crisis, the monetary expansion comes with the boom. I argue that what I call intertemporal capital substitution in industries close to final consumption explains why there is a boom in spite of the costly reallocations. More specifically, monetary expansion only gradually increases the demand for nonspecific factors of production by industries that are temporally remote from final consumption. Responding to the expected higher cost of nonspecific factors, consumer-goods industries temporarily increase output and depreciate specific durable production factors faster than they planned.

Modelling Effects of Tariff Liberalisation on India’s Key Export Sectors: Analysis of the EU–India Free Trade Agreement

Trade agreements are increasingly being negotiated between developed and emerging economy partners. An example is the EU–India Free Trade Agreement (FTA) for which negotiations began in 2007. There has been a debate on the potential effects of the proposed FTA and how this can impact on India’s key export sectors. Our study addresses this aspect from a global computable general equilibrium (CGE) modelling perspective. Using the Global Trade Analysis Project (GTAP) framework, we analyse trade and welfare impacts of the proposed FTA between the EU and India. Two scenarios are modelled: first, complete and immediate elimination of tariff on all goods traded and second, selective tariff elimination on textiles, wearing apparel and leather goods—products in which India has a comparative advantage. Results under both scenarios show that India enjoys positive welfare effects though there is a possibility of trade diversion. Under scenario 1, India loses due to a negative terms of trade (ToT) effect. Under scenario 2, with selective sectoral liberalisation, gains are mainly concentrated in the textiles, wearing apparel and leather sectors. There is a positive output effect from change in demand for factors of production, suggesting that the proposed FTA could lead to relocation of labour-intensive production to India. JEL Classification: F15, F47, F62

An inquiry into the cost structure of state transport undertakings in India

This paper examines the cost structure particularly cost elasticities, returns to scale, marginal cost of production, technological progress, demand for factor of production, and factor substitution in publicly owned State Transport Undertakings (STUs) in India. To examine these issues, a translog cost function is estimated jointly with factor share equations subject to required coefficient restrictions by using the method of ‘Zellner’s iterative’ technique using the annual data of 11 STUs from 2000–01 to 2010–11. We find that the cost function is fully separable between time (technology) and its other arguments; therefore, technological progress experienced by STUs is (Hicks) neutral and returns to scale depends on output alone. Further analysis reveals that the average cost curve for STUs is U-shaped and it is increasing for the mean firm; consequently, large and medium size STUs are operating on diseconomies of scale whereas relatively small size STUs are experiencing economies of scale. We also examined the technological progress that STUs have enjoyed over time. It is found that the technological progress is same across STUs, though diminishing over time. STUs’ cost savings due to technological progress has reduced from 2.1% of the total cost in 2000–01 to 1.3% of the total cost in 2010–11. Finally, we analyzed price elasticities of input demand and elasticity of substitution. It is found that all input demands are price inelastic and cross-price effect is not very strong. Since all own-partial elasticities of substitution are negative, hence, as required, the postulates of the cost minimizing factor demand theory are satisfied.

Costs Economies of Scale and Factor Demand in Urban Bus Transport. An Analysis of Municipal Transport Undertakings in India

This article reports on a study of the cost structure and cost elasticities, economies of scale, demand for factor of production, and factor substitution in Municipal Transport Undertakings (MTUs, bus transport companies) in India. The author estimated a translog cost function using the data of seven major MTUs for which consistent data are available from 1990-1991 and 2001-2002. The author found that the average cost curve for MTUs is U-shaped and it is decreasing for the mean firm. That is, the typical firm operating at the sample mean of the variables is subject to economies of scale. Analysis of returns to scale experienced by each firm during recent years of the sample period indicates that all MTUs are operating on economies of scale. The author notes that economies of scale is increasing over time. Thus, merger of different firms operating in the same city would be desirable in terms of cost savings since a single, larger firm could exploit economies of scale more effectively. The author also found that all of the MTUs experienced technological regress during recent years; this problem is more pronounced for smaller firms than for larger firms. Finally, the author reports that all input demands are price inelastic and the cross-price effect is very weak.

A game-theoretic model of timber prices with capital stock: an empirical application to the Finnish pulp and paper industry

The paper provides a framework to approach price and quantity determination in the roundwood market from a new perspective. In the spirit of the trade union literature, a model of timber price determination is formulated according to which the forest owners' association determines timber prices and then forest firms unilaterally decide on the timber to be used. The novelty here is to incorporate investment decisions of firms as a strategic factor into the model. The structure of the model is the following. The game is played in two stages. First, the forest owners' association and the firms in the forest industry decide on timber price and capital stock, respectively. In the second stage, the firms determine timber demand conditional on the timber price - capital stock game, so that the equilibrium concept is the subgame perfect Nash equilibrium. This game-theoretic model is applied to the annual data from the Finnish pulp and paper industry over the period 1960-1992. Estimation and testing results concerning the price and quantity determination of timber as well as capital stock behavior are generally favorable for the hypotheses presented. In particular, diagnostics and various test procedures indicate that these equations outperform conventional specifications derived from the theory of the demand for factors of production.

A monopoly-union model of wage determination with capital and taxes: An empirical application to the Finnish manufacturing

The paper formulates a model of wage determination in which the firm decides on employment after a monopoly union has determined wages. The novelty is to incorporate into the model investment and capital decisions by firms. The subgame-perfect Nash equilibrium and its comparative statics for wages, capital stock and employment are characterized in a two-stage game. The model is then estimated by using annual data from the Finnish manufacturing sector over the period 1960–1987. The dynamic system of equations describing the determination of capital stock, wages and hours of work performs reasonably well; there are no obvious signs of misspecifications, coefficient estimates are relatively precise and other properties of the models predominantly lie in conformity with our theoretical reasoning. The Nash equilibrium with dynamics for nominal wages and capital stock encompasses more conventional specifications, which can be derived from the neoclassical theory of investment and demand-supply theory of labour markets. Finally, diagnostics and various non-nested test procedures indicate that the conditional hours of work specification - where hours of work are determined recursively after the wage-capital stock game - outperforms alternative specifications implied by the conventional theory of the demand for factors of production.

Mathematical Programming and Economic Theory

This paper, which is based on the remarks offered during a plenary address at the May 1989 CORS/TIMS/ORSA meeting in Vancouver, discusses the analogy between economic institutions and algorithms for solving mathematical programming problems. The simplex method for solving linear programs can be interpreted as a search for market prices that equilibrate the demand for factors of production with their supply. A possible interpretation in terms of the internal organization of a large firm is offered for Lenstra's integer programming algorithm.

Demand for factors of production in municipal police departments

As the fiscal crises of municipalities deepen, the search for ways to reduce the cost of providing municipal services increases. In the production of police service, the use of civilians to handle administrative jobs has mcrease&( In this regard, the studies of demand for productive factors in municipal police departments becomes interesting. Several attempts have been made to estimate input demands or expenditure functions for police departments. Carr-Hill and Stern [5], Chapman et al. 161, Vatey and Philips (231, Pbifips and Votey (201, Greenwood and Wadyeki 1121, Ohls and Wales [18], and Ehrlich [ll] all have estimated the demand for factors as part of a simultaneous equation system. Most of these studies were not interested in the factor demands.’ They were only necessary to estimate correctly the supply of offense equations. Same of the equations are no1 carefully specified and justified. There are however, some single equation studies. Hirsch [15], Borcherding and Deacon [4], Bergstrom and Goodman [l], and McDougall [I 61 all estimated police demand equations. All the above studies use lhe Cobb-Douglas or the CES functional form -functional forms that are too restrictive. In particular, the assumptions of constant elasticity of substitution between inputs is unacceptable when there are more than two inputs. Second, these studies have created police production as nonjoint even though police departments are considered as multiproduct firms producing a variety of outputs. Philips [19] has employed the Constant Difference Elasticity production function to estimate factor demands in municipal police departments in

Demand for Factors of Production: a Study of Michigan's municipal police departments

Demand for Factors of Production: a Study of Michigan's municipal police departments

Interrelated Demand for Factors of Production in the U. K. Engineering Industry, 1968-81

Journal Article Interrelated Demand for Factors of Production in the U. K. Engineering Industry, 1968-81 Get access R. I. D. Harris R. I. D. Harris Queen's University, Belfast Search for other works by this author on: Oxford Academic Google Scholar The Economic Journal, Volume 95, Issue 380, 1 December 1985, Pages 1049–1068, https://doi.org/10.2307/2233264 Published: 01 December 1985

Stochastic Optimal Control by Pseudo-Inverse

Also, I investigated various proxies for labor intensity other than average work-week, compared three methods of deseasonalization, tested the model with monthly and quarterly data, and tested the ability to forecast using models A and B. results of each of these inquiries are available from the author upon request. (Palo Alto, California: Stanford University Press, 1959). Berndt, Ernst R., Melvyn A. Fuss, and Leonard Waverman, Dynamic Adjustment Models of Industrial Energy Demands: Empirical A nalysis for U. S. Manufacturing 1947-1974 (Palo Alto, California: Electric Power Research Institute, 1980). Morrison, Catherine J., and Ernst R. Berndt, Short-Run Labor Productivity in a Dynamic Model, Journal of Econometrics 16 (Aug. 1981), 339-365. Nadiri, M. Ishaq, and Sherwin Rosen, Interrelated Factor Demand Functions, American Economic Review 59 (Sept. 1969), 457-471. , A Disequilibrium Model of Demand for Factors of Production (New York: National Bureau of Economic Research, 1974). Tinsley, P. A., An Application of Variable Weight Distributed Lags, Journal of the American Statistical Association 62 (Dec. 1967), 1277-1289. Treadway, Arthur B., The Globally Optimal Flexible Accelerator, Journal of Economic Theory 7 (1974), 17-39.

The energy crisis and its impact on the stability of the demand for factors of production

This paper addresses the question of the stability of the demand for the factors of production at the aggregate level for United States manufacturing over the period 1947 to 1976. The results are conclusive. The demand for capital and labour has remained virtually constant over the period of investigation whilst the relative importance of the factors affecting the demand for energy has changed in a statistically significant fashion.

Adaptive strategies of the firm through a business cycle

The paper examines the behaviour of a profit-maximizing firm which forecasts a recession and which has at its disposal to regulate its level of equipment and its level of employment three control variables (investment, recruitment, firing), the selling price being held constant. It shows that (i) the expectation of a recession by a firm is enough to launch a real recession in the demand for production factors (equipment and recruitment); (ii) by comparison with a situation in which the firm may manipulate the selling price, price rigidities imply the occurrence of excess capacity — in addition, they do not allow the firm to delay firing and induce a stronger irregularity in recruitment and firing, and (iii) depending on the characteristics of the firm and of the environment a unique model is compatible with a whole variety of behavioural patterns.

The energy crisis and its impact on the stability of the demand for factors of production

This paper addresses the question of the stability of the demand for the factors of production at the aggregate level for United States manufacturing over the period 1947 through 1976. The results are conclusive. The demand for capital and labor have remained virtually constant over the period of investigation while the relative importance of the factors affecting the demand for energy has changed in a statistically significant fashion.

The Green Revolution as a Case Study in Transfer of Technology

The green revolution was a transfer of the idea of fertilizer-responsive grain varieties and the capacity to develop them from temporate countries to the countries of South and Southeast Asia, the Middle East, and Latin America. Key actors in this transfer of technology included the public research institutions in the less-developed countries (LDCs), the International Agricultural Research Centers, the Ford and Rockefeller Foundations, and the United States Agency for International Development. Once these institutions had bridged the gap between countries, the farmers rapidly accepted the new technology in areas where the agroclimatic and economic conditions were favorable. The green revolution was neither the cure for the problems of world hunger, as some early enthusiasts suggested, nor an important cause of income inequality and poverty, as suggested by its critics. When separated from the impact of factors such as rapid population growth, the shortage of arable land, and government policy, it is clear that the green revolution has substantially increased the supply of food grain and thus kept food grain prices lower than they would have been in the absence of new technology. This lowering of prices generally had a positive impact on income distribution. At the same time these varieties have had a less positive impact on agricultural income through their impact on demand for factors of production: landowners have benefited more than laborers. However, laborers would have been in a worse position in the absence of the green revolution.

The effects of rationing on the demand for production factors: the case of the Swedish roundwood market

This paper, which is inspired by the tendency of permanent excess demand in the Swedish roundwood market during the late seventies, contains theoretical results on how rationing of roundwood affects the demand for nonrationed production factors. The typical corporation within the forest industry has more than one plant, and the analysis also contains results on how the rationed resource is allocated between low-cost and high-cost plants. The corporation is assumed to work under perfect competition, but it is also hinted at how the results are affected by monopolistic market conditions.

The Interpretation of Least Squares Regression With Interaction or Polynomial Terms

l'Evolution de Coefficients Input-Output, Economic Applique 16 (1) (1963). Parikh, Ashok, and R. Edwards, Estimation of Gross Domestic Output and Employment by Sectors through Input-Output SSRC Report, unpublished, 1975. Theil, Henri, Applied Economic Forecasting (Amsterdam: North-Holland Publishing Company, 1966). Theil, Henri, and C. B. Tilanus, Demand for Production Factors and the Price Sensitivity of Input-Output Predictions, International Economic Review 5 (1964), 258-272. Tilanus, C. B., Input-Output Experiments, The Netherlands, 1918-61 (Rotterdam: Rotterdam University Press, 1966). United Nations, Input-Output Tables and Analysis, Studies in Methods, series F, no. 14, rev. o (New York: United Nations, 1973).