Davis, Morris A.; Heathcote, Jonathan - 2004
are denoted x
it
,i∈ {b,m,s}. Output of inter-
mediate good i is a Cobb-Douglas function of the quantity of capital k
it …
and labor n
it
allocated to technology i :
x
it
= k
it
θ
i
(z
it
n
it
)
1−θ
i
. (2.1)
Note that the three production …
firms’ static maximization problem at date t is
max
{k
it
,n
it
}
i∈{b,m,s}
X
i
{p
it
x
it
}−r
t
k
t
−w
t
n
t
subject to eq …