Are Financial Variables Inputs in Delivered Production Functions? No
Keywords:
money, production functions, financial variables, Baumol-Tobin model, credit, monetary inputsAbstract
Fischer's classic (1974) paper develops conditions under which it is appropriate to use money as an input in a 'delivered' production function. In this paper, we extend Fischer's model I (the Baumol-Tobin inventory approach) by incorporating credit into the analysis. Our investigation of the extended model brings out a very restrictive but necessary implicit assumption employed by Fischer to treat money as an input. Namely, that there exists a binding constraint on the use of money! A similar result holds for our more general model.Downloads
References
Barnett, W. (1987). The microeconomic theory of monetary aggregation. In W. Barnett & K. Singleton (Eds.), New approaches to monetary economics. Cambridge University Press. https://doi.org/10.1017/cbo9780511759628.007
Bernstein, J. (1978). The demand for money by the firm. In D. Fischer, Monetary theory and the demand for money (Apéndice B). John Wiley & Sons.
Betancourt, R., & Robles, B. (1989). Credit, money and production: Empirical evidence. Review of Economics and Statistics, 71(4), 712–717. https://doi.org/10.2307/1928118
Blinder, A., & Stiglitz, J. (1983). Money, credit constraints, and economic activity. American Economic Review: Papers and Proceedings, 73(2), 297–302.
Brunner, K., & Meltzer, A. (1988). Money and credit in the monetary transmission process. American Economic Review, 78(2), 446–451.
Calvo, G. (1995). Essays on money, exchange rates, and output. MIT Press. https://doi.org/10.7551/mitpress/4758.001.0001
Calvo, G., & Thoumi, F. (1984). Demand fluctuations: Inventories and capacity utilization. Southern Economic Journal, 50(3), 743–754. https://doi.org/10.2307/1057989
Clower, R., & Howitt, P. (1978). The transactions theory of the demand for money: A reconsideration. Journal of Political Economy, 86(3), 449–466.
Fischer, S. (1974). Money and the production function. Economic Inquiry, 12(4), 517–533. https://doi.org/10.1111/j.1465-7295.1974.tb00419.x
Fisher, M., & Seater, J. (1993). Long-run neutrality and superneutrality in an ARIMA framework. American Economic Review, 83(3), 402–415.
Green, H. A. J. (1976). Consumer theory. Academic Press.
Haliassos, M., & Tobin, J. (1989). The macroeconomics of government finance. In B. Friedman & F. Hahn (Eds.), Handbook of monetary economics. North Holland Publishing Co. https://doi.org/10.1016/s1573-4498(05)80024-4
Nguyen, H. (1986). Money in the aggregate production function: Reexamination and further evidence. Journal of Money, Credit and Banking, 18(2), 141–151.
Robles, B. (1995). Finance capital in dynamic factor demand models. Applied Economics.
Rotemberg, J., Driscoll, J., & Poterba, J. (1995). Money, output, and prices: Evidence from a new monetary aggregate. Journal of Business and Economic Statistics, 13(1), 67–83. https://doi.org/10.1080/07350015.1995.10524580
Sinai, A., & Stokes, H. (1989). Money balances in the production function: A retrospective look. Eastern Economic Journal, 15(4), 349–363.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 1995 Roger Betancourt, Miguel Kiguel
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
Article usage
- ViewsTimes this article's page was opened since the journal started recording statistics. One person can visit more than once.
- 146
- DownloadsTimes the full text of this article (usually the PDF) was opened or downloaded.
- 174
All time, as recorded by the journal.
Last 2 years: 51 views, 111 downloads.
1.19 downloads per view (journal average 1.65).Downloads of the full text for every abstract view of this article, compared with the whole journal.
Explore the journal's metrics
