Since Eq. (17.6.1) represents the long-run, or equilibrium, demand for capital stock,
Eq. (17.6.5) can be called the short-run demand function for capital stock since in the short
run the existing capital stock may not necessarily be equal to its long-run level. Once we estimate
the short-run function (17.6.5) and obtain the estimate of the adjustment coefficient
δ (from the coefficient of Yt−1), we can easily derive the long-run function by simply dividing
δβ0 and δβ1 by δ and omitting the lagged Y term, which will then give Eq. (17.6.1).