As large physical capital stock projects need long periods to be
built, a time-to-build specification is incorporated in factor
demand models. Time-to-build and adjustment costs dynamics are
identified since by the first moving average dynamics, whereas by
the latter autoregressive dynamics are induced. Empirical evidence
for time-to-build is obtained from data from the Dutch construction
industry and by the estimation result from the manufacturing
industry of six OECD countries.
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