A putty-clay model with three factors of production and partly endogenous technical progress

On the diffusion of technologies in a vintage framework : theoretical considerations and empirical results

“…Furthermore, the results showed almost no capital-augmenting technological progress. The putty-clay models, for instance those developed by Kuipers and van Zon (1982), Gelauff, Wennekers and de Jong (1985), and Muysken and van Zon (1987), are all based on a CES production function. The optimal labour intensity stems from maximizing firm behaviour.…”

“…We will use Dutch annual data of the manufacturing sector and we will estimate the model for the period 1960 to 1988. Next to the discussion of the differences between the two models, we will compare our results with the results of Gelauff, Wennekers and de Jong (1985) and of Muysken and van Zon (1987). 61 Finally, we will shed some light on the development of the labour productivity and we will investigate whether our model is able to describe the productivity slowdown.…”

“…Cf. Muysken and van Zon (1987) for a comparison of their model with the models of Kuipers and van Zon (1982), Gelauff, Wennekers and de Jong (1985).…”

“…Following the seminal works of Johansen and Salter, we will develop a puttyclay vintage model. Examples in the Netherlands of such models are Kuipers and van Zon (1982), Gelauff, Wennekers and de Jong (1985) and Muysken and van Zon (1987). The reason for using this type of model is threefold: (i) all Dutch vintage models find a significant rate of embodied technological change, which exclude the use of aggregate models; (ii) vintage models can measure technological change more accurately, especially when the age structure changes over time (cf.…”

“…The basic putty-clay model follows the Dutch vintage-modelling tradition and will rely heavily on the work of Kuipers and van Zon (1982), Gelauff, Wennekers and de Jong (1985) and of Muysken and van Zon (1987), in the remainder of this book referred to as KvZ, GWJ and MvZ, respectively. In these models, it is assumed that the rate of technological progress is given exogenously and that all investment is of the latest type, i.e., that all firms invest in the best-practice technology.…”