scholarly journals How to Explain When the ES Is Lower Than One? A Bayesian Nonlinear Mixed-Effects Approach

2020 ◽  
Vol 13 (2) ◽  
pp. 21 ◽  
Author(s):  
Nguyen Ngoc Thach
Keyword(s):  
Production Function ◽  
Mixed Effects ◽  
Output Growth ◽  
Nonlinear Mixed Effects ◽  
Data Set ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Mh Algorithm ◽  
Factor Substitution ◽  
Elasticity Of Factor Substitution

Most studies in Vietnam use the Cobb-Douglas production function and its modifications for economic analysis. Extremely rigid presumptions are a main weak point of this functional form, particularly if the elasticity of factor substitution (ES) is equal to one, which hides the role of the ES for economic growth. The CES (constant elasticity of substitution) production function with more flexible presumptions, concretely its ES, is not unitary, and has been used more and more widely in economic investigations. So, this study is conducted to estimate the average ES through the specification of an aggregate CES function for the Vietnamese nonfinancial enterprises. By performing Bayesian nonlinear mixed-effects regression via Random-walk Metropolis Hastings (MH) algorithm, based on the data set of the listed nonfinancial enterprises of Vietnam, the author found that the CES function estimated for the researched enterprises has an ES lower than one, i.e., capital and labor are complimentary. This finding shows that Vietnamese nonfinancial enterprises can confront a downward trend of output growth.

RATE OF AND BIAS TO TECHNICAL CHANGE UNDER A REGIME OF ALMOST HOMOGENEITY OF THE PRODUCTION FUNCTION

2000 ◽  
Vol 4 (3) ◽  
pp. 415-421
Author(s):  
Michael J. Panik
Keyword(s):  
Production Function ◽  
Technical Change ◽  
Output Growth ◽  
Aggregate Output ◽  
Factor Substitution ◽  
Elasticity Of Factor Substitution ◽  
The Individual

This paper utilizes the concept of almost homogeneity to obtain a generalization of the elasticity of factor substitution. From this, an expression for the bias to technical change is derived that explicitly includes the individual degrees of input homogeneity. It is shown that the relative values of these homogeneity parameters can affect the magnitude and direction of the factor-saving bias to technical change. These parameters also influence the size of the residual or unexplained component of aggregate output growth.

scholarly journals Measuring Technological Progress of Smart Grid Based on Production Function Approach

2014 ◽  
Vol 2014 ◽  
pp. 1-9 ◽  
Author(s):  
Dong Han ◽  
Zheng Yan
Keyword(s):  
Smart Grid ◽  
Production Function ◽  
Technological Progress ◽  
Data Envelopment ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Estimated Parameters ◽  
Production Function Approach ◽  
Ridge Regression Analysis ◽  
Function Models

Production function theory combined with data envelopment analysis (DEA) and ridge regression analysis (RRA) is applied to evaluate the technological progress of the smart grid. The feasible conditions of production function models are determined by the DEA algorithm. RRA is applied to estimate the relevant parameters of the evaluation models under study. One of the significant steps in the design of the assessment algorithm is the structure of production function models. Therefore, the Cobb-Douglas, constant elasticity of substitution, and translog production functions are employed to evaluate the technological progress of the smart grid, respectively. The results of analysis and calculation mainly include the DEA relative efficiency, slacks in inputs and outputs of inefficient units, estimated parameters, and quantitative indices of technological progress.

CONSTANT-ELASTICITY-OF-SUBSTITUTION PRODUCTION FUNCTION

2008 ◽  
Vol 12 (5) ◽  
pp. 694-701 ◽  
Author(s):  
Hideki Nakamura ◽  
Masakatsu Nakamura
Keyword(s):  
Production Function ◽  
Capital Accumulation ◽  
Specific Form ◽  
Production Functions ◽  
Elasticity Of Substitution ◽  
Intermediate Goods ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Douglas Production Function

We consider endogenous changes of inputs from labor to capital in the production of intermediate goods, i.e., a form of mechanization. We derive complementary relationships between capital accumulation and mechanization by assuming a Cobb–Douglas production function for the production of final goods from intermediate goods. A constant-elasticity-of-substitution production function in which the elasticity of substitution exceeds unity can be endogenously derived as the envelope of Cobb–Douglas production functions when the efficiency of inputs is assumed in a specific form. The difficulty of mechanization represents the elasticity of substitution.

scholarly journals Intermetropolitan Comparisons Of Production Function

2011 ◽  
Vol 3 (2) ◽  
pp. 112
Author(s):  
Martin Williams ◽  
Tuan Ton-That
Keyword(s):  
Production Function ◽  
Production Technology ◽  
Returns To Scale ◽  
Elasticity Of Substitution ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Different Levels ◽  
Variable Returns To Scale ◽  
Inputs And Outputs

A nonhomogeneous production is used to study the features of the production technology across U.S. cities. We compute marginal productivities and scale elasticities for different levels of inputs and outputs. The form of the production function allows variable returns to scale. We can also test the Cobb-Douglas and constant elasticity of substitution forms within the nonhomogeneous specification. Conclusions are drawn concerning returns to scale across cities of different sizes.

scholarly journals Endogenous Economic Growth: The Arrow-Romer Theory and a Test on Vietnamese Economy

2020 ◽  
Vol 17 ◽  
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Endogenous Growth ◽  
Emerging Economies ◽  
Empirical Studies ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Endogenous Growth Theory ◽  
Labor Relationship ◽  
Elasticity Of Factor Substitution

The Arrow-Romer growth model helped to overcome the main drawback of the Solow-Swan model, where technical change is created exogenously, not by the firms making decisions, and formulated the conditions for endogenous growth in an economy. Nonetheless, the presentation of the Arrow-Romer model and corresponding empirical studies by the Cobb-Douglas functions hides the role of the capital-labor relationship for economic growth. A constant elasticity of substitution (CES) function, constructed by Arrow et al. (1961), allows solving this problem. So, the purpose of the current research is to test the endogenous growth of the Vietnamese economy, which has experienced a more than 30-year market-oriented reform through specifying an aggregate CES function. By applying Bayesian nonlinear regression, the research results revealed the elasticity of factor substitution (ES) lower than one. This work theoretically and empirically contributes to the endogenous growth theory in problems concerned with emerging economies. Investments in physical and human capital and technological progress are the determinants of endogenous growth. From the findings obtained, the author concludes that even though having achieved a rather impressive growth rate over more than three decades, the Vietnamese economy has not yet generated the possibility of endogenous growth, and suggests that endogenous growth can be hardly generated in emerging economies like Vietnam if important growth policies related to accumulation of physical and human capital as well as enhancement of R&D activities are not simultaneously implemented. It is indispensable to focus on substantially improving institutional quality.

scholarly journals AUTOMATION, PARTIAL AND FULL

2021 ◽  
pp. 1-25
Author(s):  
Jakub Growiec
Keyword(s):  
Theoretical Analysis ◽  
Production Function ◽  
Downward Trend ◽  
Elasticity Of Substitution ◽  
Constant Elasticity ◽  
Secular Stagnation ◽  
Complex Tasks ◽  
Constant Elasticity Of Substitution ◽  
Technological Unemployment ◽  
Full Automation

When some steps of a complex, multi-step task are automated, the demand for human work in the remaining complementary sub-tasks goes up. In contrast, when the task is fully automated, the demand for human work declines. Upon aggregation to the macroeconomic scale, partial automatability of complex tasks creates a bottleneck of development, where further growth is constrained by the scarcity of essential human work. This bottleneck is removed once the tasks become fully automatable. Theoretical analysis using a two-level nested constant elasticity of substitution production function specification demonstrates that the shift from partial to full automation generates a non-convexity: humans and machines switch from complementary to substitutable, and the share of output accruing to human workers switches from an upward to a downward trend. This process has implications for inequality, the risk of technological unemployment, and the likelihood of a secular stagnation.

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