Adjustment costs in factor demand

We thank Georges Bresson, Ricardo Caballero, Ben Craig, Wolter Hassink, Steve Nickell, Patrick Sevestre, Peter Wilcoxen, and participants at seminars at several universities and conferences in North America and Europe, and a number of referees for their comments. Pfann acknowledges support from the Royal Netherlands Academy of Arts and Sciences (KNAW). Thought suggests, and experience confirms, that such a dogma [that a scientific theory is none the worse if its premises are unrealistic] will be self-indulging, permitting its practitioners to ignore or play down inconvenient departures of their theories from the observable real world.