References of "McAdam, Peter"
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See detailThe normalized CES production function: theory and empirics
Klump, Rainer UL; McAdam, Peter; Willman, Alpo

in JOURNAL OF ECONOMIC SURVEYS (2012), 26(5), 769-799

The elasticity of substitution between capital and labor and, in turn, the direction of technical change are critical parameters in many fields of economics. Until recently, though, the application of ... [more ▼]

The elasticity of substitution between capital and labor and, in turn, the direction of technical change are critical parameters in many fields of economics. Until recently, though, the application of production functions with specifically non-unitary substitution elasticities (i.e., non-CobbDouglas) was hampered by empirical and theoretical uncertainties. As recently revealed, normalization of production-technology systems holds out the promise of resolving many of those uncertainties. We survey and assess the intrinsic links between production (as conceptualized in a production function), factor substitution (as made most explicit in Constant Elasticity of Substitution functions) and normalization (defined by the fixing of baseline values for relevant variables). First, we recall how the normalized Constant Elasticity of Substitution function came into existence and what normalization implies for its formal properties. Then we deal with the key role of normalization in recent advances in the theory of business cycles and of economic growth. Next, we discuss the benefits normalization brings for empirical estimation and empirical growth research. Finally, we identify promising areas of future research. [less ▲]

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See detailUnwrapping some euro area growth puzzles: Factor substitution, productivity and unemployment
Klump, Rainer UL; McAdam, Peter; Willman, Alpo

in JOURNAL OF MACROECONOMICS (2008), 30(2), 645-666

In this paper, we estimate a long run supply-side system incorporating a CES production function with time-varying factor-augmenting technical progress for the euro area over the period 1970-2005. We find ... [more ▼]

In this paper, we estimate a long run supply-side system incorporating a CES production function with time-varying factor-augmenting technical progress for the euro area over the period 1970-2005. We find that the elasticity of substitution lies below unity at 0.7, that labor-augmenting technical progress is dominant in the long run while capital-augmenting technical progress plays an important role in the interim period. Importantly, we also find evidence of a structural break in the pattern of biased technical progress towards the end of the 1990s. Our results help to solve two puzzles in Europe's recent growth experience which differ markedly from the US experience. The first is related to the effects of the IT boom in the 1990s on productivity growth in Europe. The second puzzle concerns the changes in the "Okun's law" relationship, linking growth to the reduction of unemployment, which are observable in Europe since the late 1990s. (C) 2007 Published by Elsevier Inc. [less ▲]

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See detailFactor substitution and factor-augmenting technical progress in the United States: A normalized supply-side system approach
Klump, Rainer UL; McAdam, Peter; Willman, Alpo

in REVIEW OF ECONOMICS AND STATISTICS (2007), 89(1), 183-192

Using a normalized CES function with factor-augmenting technical progress, we estimate a supply-side system of the U.S. economy from 1953 to 1998. Avoiding potential estimation biases that may have ... [more ▼]

Using a normalized CES function with factor-augmenting technical progress, we estimate a supply-side system of the U.S. economy from 1953 to 1998. Avoiding potential estimation biases that may have occurred in earlier studies and putting a high emphasis on data consistency, we obtain robust results not only for the aggregate elasticity of substitution but also for the parameters of labor and capital augmenting technical change. We find that the elasticity of substitution is significantly below unity and that technical progress shows an asymmetrical pattern where the growth of laboraugmenting technical progress is exponential, while that of capital is hyperbolic or logarithmic. [less ▲]

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See detailThe long-term sucCESs of the neoclassical growth model
Klump, Rainer UL; McAdam, Peter; Willman, Alpo

in OXFORD REVIEW OF ECONOMIC POLICY (2007), 23(1), 94-114

In this paper, we seek to re-establish the link between the constant elasticity of substitution (CES) production function and neoclassical Solow growth theory. We do so in three dimensions. First, we ... [more ▼]

In this paper, we seek to re-establish the link between the constant elasticity of substitution (CES) production function and neoclassical Solow growth theory. We do so in three dimensions. First, we review the increasing importance of the CES technology in modem dynamic macrocconornics, in expanding not only theory but also in addressing important policy questions. Second, we argue that the importance of the CES function in growth theory is intimately linked to 'normalization'. Finally, we examine the data congruence between CES functions and recent growth patterns in the USA and the euro-area economies, where we apply a supply-side system incorporating a CES function with factor-augmenting and time-varying technical progress. [less ▲]

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