Public Input Provision, Tax Base Mobility, and External Ownership

This article investigates the distortionary impacts of tax base mobility and external ownership on public input provision. Regional governments compete for mobile tax bases (e.g., business capital). The impact of regional public policy partially accrues to non-residents because immobile factors (e.g., business land) are subject to external ownership. This article derives an optimal rule for regional public input provision that illustrates how these two distortionary impacts depend on the nature of production functions. The impact of external ownership is particularly complex. To explore this impact in detail, the case of production functions with constant elasticity of substitution is examined. Public inputs with different productivity impacts yield fairly different implications of external ownership for inefficient public input provision.

Solution of the system of nonlinear PDEs characterizing CES property under quasi-homogeneity conditions

The constant elasticity of substitution (CES for short) is a basic property widely used in some areas of economics that involves a system of second-order nonlinear partial differential equations. One of the most remarkable results in mathematical economics states that under homogeneity condition i.e. the production function is a homogeneous function of a certain degree, there are no other production models with the CES property apart from the famous Cobb–Douglas and Arrow–Chenery–Minhas–Solow production functions. In this paper we generalize this classification result to a much wider framework of production functions under quasi-homogeneity conditions, showing in particular the existence of three new classes of production models with the CES property.

Income and factor substitution: an investigation on the Solow growth model under the constant elasticity of substitution

PurposeThe purpose of this study is to examine whether the elasticity of substitution (ES) varies between developed and developing countries.Design/methodology/approachThe author derives the growth regressions from the Solow model under the constant elasticity of substitution production function by using the first-order Taylor series expansion and estimate them for each country group classified based on time-varying behavior of income per worker using the data-driven algorithm.FindingsThe ES is not unitary and varies among country groups. Developed countries generally have a higher ES than developing countries.Originality/valueFor the first time, the author uses the first-order Taylor series expansion to linearize the steady-state value of income per worker, as the author considers this approach to be relatively more straight-forward and tractable. Furthermore, the author estimates the equations using both cross-section and panel data techniques and employs the data-driven algorithm proposed by Phillips and Sul (2007) to classify countries.

AUTOMATION, PARTIAL AND FULL

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.

Inverse problems in analysis of input-output model in the class of CES functions

The article proposes a modification of the approach to the analysis of inter-industry balance. Instead of linear models of inter-industry balance, based on the hypothesis of W. Leontief about the constancy of the cost standards of production factors, the article studies nonlinear models. For the case of production functions with constant elasticity of substitution (CES) an algorithm for solving the inverse problem is proposed, which allows to identify the model of nonlinear inter-industry balance based on the data of the symmetric input-output table. Based on the Young transform and Fennel duality, with the help of this model, we develop a technology for analyzing inter-industry relationships. The technology has been tested on the data of economic statistics of Russia.

Structural Change With Long‐Run Income and Price Effects

We present a new multi‐sector growth model that features nonhomothetic, constant elasticity of substitution preferences, and accommodates long‐run demand and supply drivers of structural change for an arbitrary number of sectors. The model is consistent with the decline in agriculture, the hump‐shaped evolution of manufacturing, and the rise of services over time. We estimate the demand system derived from the model using household‐level data from the United States and India, as well as historical aggregate‐level panel data for 39 countries during the postwar period. The estimated model parsimoniously accounts for the broad patterns of sectoral reallocation observed among rich, miracle, and developing economies. Our estimates support the presence of strong nonhomotheticity across time, income levels, and countries. We find that income effects account for the bulk of the within‐country evolution of sectoral reallocation.

Constant elasticity of substitution function based RANSAC for image stitching

Feature matching is very important in image stitching. RANSAC algorithm is a representative algorithm for feature matching. However, RANSAC still has many shortcomings such as a large number of iterations, a large computational complexity and cannot completely eliminate mismatches. To address above problem, in this paper, we propose a novel method termed constant elasticity of substitution function based RANSAC (CES-RANSAC) for image stitching. Specifically, CES-RANSAC improves the RANSAC algorithm by constructing a utility function, optimizing the boundary of the utility function, calculating Cobb-Douglas coefficients. It also introduces Lindahl equilibrium to derive the return value t to help eliminate mismatches. Experiments show that compared with the traditional RANSAC algorithm, CES-RANSAC has improved matching accuracy and increased computational efficiency, which further improves the efficiency of the image matching algorithm.

Non-tariff barriers removal in the Brazilian coffee industry

Purpose This study aims to identify and classified non-tariff measures (NTMs) on Brazilian imports of robusta coffee beans, calculated a tariff-equivalent of non-tariff barriers (NTBs) and assessed the effects of removing NTBs from upstream and downstream domestic instant coffee supply chain. Design/methodology/approach The analysis uses documentary research to identify NTMs and the price-wedge method is applied to estimate a tariff-equivalent. The effects of suppressing the tariff-equivalent were evaluated using a partial equilibrium model with constant elasticity of substitution (Armington, 1969) and by incorporating vertical integration and uncertainty (Hallren and Opanasets, 2018). Findings The results show that NTMs seemingly hinder the entrance of coffee beans into the domestic market. The tariff-equivalent was estimated at 13.61%. Suppressing it reveals that the share of domestic coffee beans used to produce domestic instant coffee falls 0.21 p.p. while the share of domestic instant coffee consumed by the international trade rises 8.60 p.p. Originality/value What makes this paper original is that this paper investigated the effects of NTMs in a developing country, namely, Brazil. Although Brazil is one of the largest agricultural producers in the world, it has not appeared in literature in this type of analysis until now. Furthermore, it contributes to the literature on using existing techniques to investigate the impact of NTM removal on individual products in a specific country, in contrast to more recent papers that discuss using multi-country and multi-product data sets at the HTS-6 level. Thus, this paper demonstrates how a case study approach can be useful in quantifying policy changes.

Variable elasticity of substitution and economic growth in the neoclassical model

We study the effect of factor substitutability in the neoclassical growth model with variable elasticity of substitution. We consider two otherwise identical economies differing uniquely in their initial factor substitutability with Variable-Elasticity-of-Substitution (VES), Sobelow or Sigmoidal technologies. If the initial capital per capita is below its steady-state value, the economy with the higher initial elasticity of substitution will feature a higher steady-state income and capital per capita irrespective of whether the production technology is VES, Sobelow or Sigmoidal. Numerical results are provided to compare the effect of a higher elasticity of substitution in the Constant-Elasticity-of-Substitution (CES) model versus the models with variable-elasticity-of-substitution technology.