Lucas' (1967) adjustment costs model and Kydland and Prescott's (1982) time-to-build model induce mutually exclusive time-series properties that can be recovered from data. This paper investigates three variants of a theoretical model which give insight into the parameter restrictions implied by...

The aim of this paper goes some steps beyond the specification and estimation of production technologies and nonlinear dynamic optimization rules by instrumental variables methods as initially proposed by Kennan (1979). The question, that remains unanswered by the mere estimation of the...