During the last twenty years there has been an increasing tendency to derive firms’ decision rules from explicit inter-temporal optimizing models. Such quests for choice-theoretical foundations has been regarded both as logically necessary and empirically fruitful in specifying the equations describing input demand, production, pricing and inventory accumulation. In the more recent past the research in this area has followed different directions. A group of studies has relied on the introduction of convex adjustment costs to justify the forward-looking nature of input demand decisions and has analyzed the implications of the rational expectations assumption in this context. The papers by Sargent (1978), and Nickell (1984) on employment, by Abel (1980) on investment, and by Meese (1980) on both are representative of this approach. The papers by Pindyck and Rotemberg (1983a), (1983b) proceed from the same assumption but differ from the rest because the first order conditions of the maximization problems are estimated directly without obtaining a closed form solution for the firm’s decision rules. Another set of studies has instead developed the implications of the dual approach for factor demand, usually adopting the assumption of a cost-minimizing firm facing a putty-putty technology. The contributions by Jorgenson and Fraumeni (1980), and Berndt and Wood (1979), (1975), to mention just a few, belong to this category. A third group of studies has concentrated on prices and output decisions, disregarding the input demand aspect of the problem. Rotemberg (1982), (1983) and Maccini (1977), (1978) are good examples of this line of research. Finally, in Maccini (1981) and (1984) there is an attempt at analyzing investment in fixed capital and inventories together with prices and output decisions in the presence of convex costs in adjusting the capital stock.