Are financial variables inputs in delivered production functions?: No

• Roger Betancourt ^[1] ; Miguel Kiguel ^[2]
  1. [1] University of Maryland, College Park

     University of Maryland, College Park

     Estados Unidos

     
  2. [2] Banco Central. Argentina.
• Localización: Revista de análisis económico, ISSN-e 0718-8870, ISSN 0716-5927, Vol. 10, Nº 1, 1995, págs. 3-17
• Idioma: inglés
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• Resumen

  • Fischer's classic (1974) paper develops conditions under which it is appropriate to use money as an input in a 'delivered' production function. In this paper, we extend Fischer's model I (the Baumol-Tobin inventory approach) by incorporating credit into the analysis. Our investigation of the extended model brings out a very restrictive but necessary implicit assumption employed by Fischer to treat money as an input. Namely. that there exists a binding constraint on the use of money! A similar result holds for our more general model.