A new production function estimate of the euro area output gap

The process of technical change from the economist's viewpoint may be broken down into three phases: invention, innovation, and diffusion. Invention, or the increase in technological possibilities, is the discovery or perception of new configurations of technical processes or principles that alter the array of possible production functions. An innovation consists of using any given production function for the “first” time. Diffusion is basically imitative and involves the gradual replacement of old methods by the new. One example will suffice to illustrate these distinctions. The invention of the automatic bottle machine consisted of the conception, experimentation, and model-building activities of Michael J. Owens; the pioneering efforts of the entrepreneurs at Toledo, Ohio, to demonstrate that the new production function was both practical and economically feasible constituted the innovational phase; and the gradual replacement of hand-blown and semiautomatic machine methods by the new process in both American and foreign markets involved diffusion.

Download Full-text

Mathematical model of transition of a production enterprise to a circular economy

Vestnik of Samara University. Economics and Management ◽

10.18287/2542-0461-2021-12-1-144-156 ◽

2021 ◽

Vol 12 (1) ◽

pp. 144-156

Author(s):

Leonid A. Saraev ◽

Marina E. Тalikina

Keyword(s):

Mathematical Model ◽

Production Function ◽

Circular Economy ◽

Fixed Capital ◽

Production Factor ◽

New Production ◽

Manufacturing Enterprise ◽

First Case ◽

Production Activity ◽

Labor Resources

In the published article, a mathematical model of an enterprise is proposed, the production activity of which is described by two production functions. The main production function converts resources into the products of an enterprise, the additional production function turns resources into its waste, which are usually included in costs. Enterprises of a waste-free circular economy organize their own production so that the waste of an enterprise becomes new production factors and is completely converted into additional useful products. The process of transition in time of an enterprise of an ordinary economy to an enterprise of a waste-free circular economy is described using a special dimensionless transformation function, which varies from zero to one. Two variants of the peculiarities of changes in the economic indicators of an enterprise that arise during the transition to waste-free production are considered. In the first case, a one-factor manufacturing enterprise was investigated, which in its production activity uses only one resource, which integrates the volumes of factors of production consisting of fixed capital, production assets involved in the production of labor resources, used in the production of materials, applied technologies, of various kinds innovation. In the second case, a two-factor manufacturing enterprise has been investigated, which in its production activity uses two resources, the first of which is fixed capital and production assets, the second production factor includes labor resources involved in production. Regularities have been established for changes in the time of production, waste, profits and costs of an enterprise when introducing waste-free technologies for the case of one-factor production. Anumerical analysis of the obtained economic and mathematical model shows that the maximum value of the enterprise's profit changes over time and corresponds to the level of the introduced circular technologies.

Download Full-text

A Multivariate Unobserved Components Model to Estimate Potential Output in the Euro Area: A Production Function Based Approach

SSRN Electronic Journal ◽

10.2139/ssrn.3797143 ◽

2021 ◽

Author(s):

Máté Tóth

Keyword(s):

Production Function ◽

Euro Area ◽

Unobserved Components ◽

Potential Output ◽

Unobserved Components Model

Download Full-text

Estimating the Output GAP for Lebanon: A Production Function methodology

International Conference on Advances in Business Management and Law (ICABML) ◽

10.30585/icabml-cp.v2i1.205 ◽

2019 ◽

Vol 2 (1) ◽

pp. 60-83

Author(s):

Latifa Ghalayini

Keyword(s):

Economic Growth ◽

Economic Policy ◽

Labor Market ◽

Production Function ◽

Output Growth ◽

Output Gap ◽

Structural Reforms ◽

Potential Output ◽

Potential Output Growth ◽

Douglas Production Function

This paper estimates the output Gap for Lebanon to analyze the economic policy and to judge the stance of the economy. Therefore, a Cobb-Douglas production function is estimated for the period Q11998 to Q42015 and potential output calculated by substituting for potential levels of the factors in the estimated production function. The calculation of potential labor required the calculation of the NAIRU. This paper calculates therefore three types of NAIRU. The results of output gap calculations show that the Lebanese economy is working over its capacity and that it hits his limits. Furthermore, findings show that the labor market is characterized by high levels of NAIRU which restricted potential output growth. Therefore, any policy aiming to increase economic growth, while neglecting structural reforms will prove to be unsustainable.

Download Full-text