On the choice of production functions: the case of US manufacturing industries
- 1 March 1993
- journal article
- research article
- Published by Taylor & Francis in Applied Economics
- Vol. 25 (3) , 321-324
- https://doi.org/10.1080/00036849300000038
Abstract
A new CES (Bairam, 1989, 1991) production function that has the Cobb-Douglas and Leontief functions as special cases is considered and estimated. For the nondurable goods and durable-goods sectors in US manufacturing, the translog and CES functions cannot be estimated properly due to multicollinearity, whereas the Cobb-Douglas and new CES functions yield coefficients that have the correct sign and are significant at the 1% or 5% level. Both sectors exhibited increasing returns to scale, though the nondurable-goods sector is more efficient than the other sector. Although the Cobb-Douglas function cannot be rejected, the new CES functions has the maximized value of the log-likelihood function and the advantage that the variable output elasticity with respect to inputs can be tested.Keywords
This publication has 9 references indexed in Scilit:
- On returns to scale of the aggregate production functionAtlantic Economic Journal, 1992
- Functional form and new production functions: some comments and a new VES functionApplied Economics, 1991
- A new production function? Bowled by a googlyApplied Economics, 1991
- Production functions in cricket: the Australian and New Zealand experienceApplied Economics, 1990
- Estimation and testing for functional form and autocorrelation: A simultaneous approachJournal of Econometrics, 1978
- Transcendental Logarithmic Production FrontiersThe Review of Economics and Statistics, 1973
- On Estimation of the CES Production FunctionInternational Economic Review, 1967
- An Analysis of TransformationsJournal of the Royal Statistical Society Series B: Statistical Methodology, 1964
- Capital-Labor Substitution and Economic EfficiencyThe Review of Economics and Statistics, 1961