Title: Measuring input substitution in thrifts: morishima, allen-uzawa, and cross-price elasticities
Abstract: This paper examines the behavior of U.S. thrifts in the 1990s, and compares the less known, but theoretically appropriate, Morishima elasticity of substitution to the more common Allen-Uzawa elasticity. The Morishima estimates show substitution between all inputs, are clearly asymmetric, and suggest that inputs are most responsive to changes in the price of capital. In comparison, the Allen-Uzawa estimates substantially overstate substitution between capital and labor. Despite large changes in the thrift industry, the input substitution parameters varied little in the 1990s. Estimation of a thick cost frontier for 1996, however, shows important differences across efficiency levels as low-cost thrifts are more responsive to input price changes.
Publication Year: 1999
Publication Date: 1999-03-01
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 18
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