David O. Wood

Bio: David O. Wood is an academic researcher from Massachusetts Institute of Technology. The author has contributed to research in topics: Productivity & Manufacturing. The author has an hindex of 9, co-authored 16 publications receiving 2504 citations.

Technology, Prices, and the Derived Demand for Energy

Abstract: Industrial demand for energy is essentially a derived demand: the firm's demand for energy is an input is derived from demand for the firm's output. Inputs other than energy typically also enter the firm's production process. Since firms tend to choose that bundle of inputs which minimized the total cost of producing a giving level of output, the derived demand for inputs, including energy, depends on the level of output, the submitions possibilies among inputs allow by production technology, and the relative prices of all inputs.

Engineering and econometric interpretations of energy-capital complementarity

Abstract: Econometric studies have recently shown an apparent contradictory evidence regarding substitution possibilities between energy (E) and capital (K). An analytical and empirical interpretation of E-K complementarity consistent with basic microeconomics and with the manufacturing process engineering evidence of E-K substitutability is presented. The notion of utilized capital is developed, and some of the seemingly disparate econometric findings are reconciled. The analysis emphasizes to the authors that care must be taken in interpreting and properly comparing alternative elasticity measures. 42 references. (MCW)

Rates of return and capital aggregation using alternative rental prices

Abstract: "A first version of this paper was given at the John F. Kennedy School of Government, Harvard University, Program for Technology and Economic Policy Conference, 8 November 1985."

Energy price changes and the induced revaluation of durable capital in U.S. manufacturing during the OPEC decade

Abstract: When energy prices increased suddenly and unexpectedly in 1973-74 and 1979-80, a portion of the long-lived capital stock in U.S. manufacturing was rendered economically less valuable. In this paper we develop an analytical framework, consistent with the theory of cost and production, that provides an appealing structural interpretation of this capital revaluation phenomenon. In the spirit of a putty-clay model, we demonstrate that the capital -revaluation elasticity is the negative of the ex ante substitution elasticity between energy and capital equipment. The model is implemented empirically with annual data from U.S. manufacturing, 1958-81, and vintage investment data since 1929. Maximum likelihood estimation is undertaken with nonstatic expectations of future relative price values treated as an unobservable variables problem. Our principal empirical findings are (i) that the elasticity of capital valuation with respect to relative energy price increases -the capital revaluation elasticity -is between -0.234 and -0.543 in U.S. manufacturing, and (ii) that by 1981 the appropriately revalued capital stock is at least 13% less than traditional measures indicate. We also consider implications of capital revaluation for the measurement of capital-labor ratios, age-shadow price profiles, and vintage-specific Tobin's q's.

Advanced International Trade : Theory and Evidence Ed. 2

Abstract: Trade is a cornerstone concept in economics worldwide. This updated second edition of the essential graduate textbook in international trade brings readers to the forefront of knowledge in the field and prepares students to undertake their own research. In Advanced International Trade, Robert Feenstra integrates the most current theoretical approaches with empirical evidence, and these materials are supplemented in each chapter by theoretical and empirical exercises.Feenstra explores a wealth of material, such as the Ricardian and Heckscher-Ohlin models, extensions to many goods and factors, and the role of tariffs, quotas, and other trade policies. He examines imperfect competition, offshoring, political economy, multinationals, endogenous growth, the gravity equation, and the organization of the firm in international trade. Feenstra also includes a new chapter on monopolistic competition with heterogeneous firms, with many applications of that model. In addition to known results, the book looks at some particularly important unpublished results by various authors. Two appendices draw on index numbers and discrete choice models to describe methods applicable to research problems in international trade. Completely revised with the latest developments and brand-new materials, Advanced International Trade is a classic textbook that will be used widely by students and practitioners of economics for a long time to come.Updated second edition of the essential graduate textbookCurrent approaches and a new chapter on monopolistic competition with heterogeneous firmsSupplementary materials in each chapterTheoretical and empirical exercisesTwo appendices describe methods for international trade researchSolutions manual available to professorsProfessors: A supplementary Solutions Manual is available for this book. It is restricted to teachers using the text in courses.

The Impact of Outsourcing and High-Technology Capital on Wages: Estimates For the United States, 1979–1990

Abstract: We estimate the relative influence of trade versus technology on wages in a "large-country" setting, where technological change affects product prices. Trade is measured by the foreign outsourcing of intermediate inputs, while technological change is measured by expenditures on high-technology capital such as computers. The estimation procedure we develop, which modifies the conventional "price regression," is able to distinguish whether product price changes are due to factor-biased versus sector-biased technology shifts. In our base specification we find that computers explain about 35 percent of the increase in the relative wage of nonproduction workers, while outsourcing explains 15 percent; both of these effects are higher in other specifications.

Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?

Abstract: There is considerable evidence that producer-level churning contributes substantially to aggregate (industry) productivity growth, as more productive businesses displace less productive ones. However, this research has been limited by the fact that producer-level prices are typically unobserved; thus within-industry price differences are embodied in productivity measures. If prices reflect idiosyncratic demand or market power shifts, high "productivity" businesses may not be particularly efficient, and the literature's findings might be better interpreted as evidence of entering businesses displacing less profitable, but not necessarily less productive, exiting businesses. In this paper, we investigate the nature of selection and productivity growth using data from industries where we observe producer-level quantities and prices separately. We show there are important differences between revenue and physical productivity. A key dissimilarity is that physical productivity is inversely correlated with plant-level prices while revenue productivity is positively correlated with prices. This implies that previous work linking (revenue-based) productivity to survival has confounded the separate and opposing effects of technical efficiency and demand on survival, understating the true impacts of both. We further show that young producers charge lower prices than incumbents, and as such the literature understates the productivity advantage of new producers and the contribution of entry to aggregate productivity growth.

Verification and validation of simulation models

Abstract: Verification and validation of simulation models are discussed in this paper. Three approaches to deciding model validity are described, two paradigms that relate verification and validation to the...