An alternative estimation procedure of a clay-clay type of vintage model: The case of the Netherlands, 1959–1973

Summary

In this paper the Den Hartog-Tjan estimation procedure for a fixed coefficients vintage model of the Dutch economy was challenged. An alternative procedure has been developed, which is not subject to the objection that actual output and labour demand data are used as proxies for capacity variables. The main conclusion of the Den Hartog-Tjan paper, that the ’sixties are characterized by excess capacity and the early ’seventies by structural unemployment, is confirmed. There is, however, reason to suspect that the authors overestimate the life span of oldest equipment and underestimate the amount of structural unemployment in the ’seventies.