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Working Paper

Factor-Adjustment Costs at the Industry Level

Recent theoretical and econometric developments allow estimation of dynamic cost functions that include optimal adjustment of quasi-fixed factors. Such a cost function is estimated for the U.S. steel industry for the years 1954-1985 to investigate the cost of adjusting blue- and white-collar labor stocks, and to examine the importance of the specification of the adjustment-cost function.

Working Papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views expressed in this paper are those of the authors and do not represent the views of the Federal Reserve Bank of Cleveland or the Federal Reserve System.

Suggested Citation

Deily, Mary, and Dennis Jansen. 1989. “Factor-Adjustment Costs at the Industry Level.” Federal Reserve Bank of Cleveland, Working Paper No. 89-11.