The Review of Economics and Statistics Vol. 73 No. 3 1991

Generalized Q Models for Investment

Marzio Galeotti¹; Fabio Schiantarelli^2,3

¹ University of Milan · ² Boston College · ³ IZA - Institute of Labor Economics

Abstract

The authors extend the Q theory of investment to allow for adjustment costs for labor, under the additional assumption that the firm is a monopolistic competitor in the output market. The issue of nonconstant returns to scale is also discussed. The authors show that the standard Q model is a special case of a more general model involving testable parameter restrictions. Estimates for the U.S. manufacturing sector suggest that the departure from the assumption of perfect competition and lack of adjustment costs for labor receive empirical support in the data.

DOI

10.2307/2109562

Volume

73

Issue

3

Pages

383

Sources

crossref openalex

Cite

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