2 edition of **Elasticities of substitution among inputs** found in the catalog.

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- 7 Currently reading

Published
**1992**
by University of Illinois at Urbana-Champaign in Champaign
.

Written in English

- Economics

**Edition Notes**

Includes bibliographical references (p.28-30).

Statement | Chang Gyu Kwag, Walter W. McMahon |

Series | BEBR faculty working paper -- no.92-0115, BEBR faculty working paper -- no.92-0115. |

Contributions | McMahon, Walter W., University of Illinois at Urbana-Champaign. Bureau of Economic and Business Research |

The Physical Object | |
---|---|

Pagination | 30 p. ; |

Number of Pages | 30 |

ID Numbers | |

Open Library | OL25168386M |

OCLC/WorldCa | 535284712 |

Little work has been done in evaluating the effects of changing fuel prices on the demand for fuel inputs by the cross section of individual industries which comprise the US industrial sector. This project is undertaken here. Measures of the responsiveness of energy demand to price changes include elasticities of demand and substitution. Output elasticities are also expressed as the ratios of the marginal and average productivities of the respective inputs. Thus the output elasticity of input X is. E x =MP x /AP x and of input Y, Ey = MP y /AP y. If MP and AP of a good are positive, its output elasticity is also positive.

Substitution Elasticities in a CES Framework – Motivation and Objective / State of Research / Data and Estimation / Results 16 Although changes over a period of 12 years are rather minor, substitution elasticities may change over time Open Research Questions Do Cited by: In Search of the Armington Elasticity Robert C. Feenstra, Maurice Obstfeld, and Katheryn N. Russ* stein and Khan (), Shiells, Stern and Deardorf () and Marquez (), among others, document the growth over time in the supply of econometric studies on larger and File Size: KB.

Gabriel M. Ahlfeldt & Daniel P. McMillen New Estimates of the Elasticity of Substitution of Land for Capital Abstract: We reconcile conflicting evidence on the magnitude of the elasticity of substitution of land for capital, which is a key determinant of the relationship between the price of land and the density of land. of substitution for CES and VES production functions, defined in terms of firm-level data, it is necessary that values of inputs of production be the same for firms within specified categories. Further, there is a problem associated with the interpretation of an elasticity of substitution for a product that is defined in a highly aggregative form.

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Substitution elasticities among inputs: The Hicks-Allen partial elasticities of substitution As was previously discussed in Chapter 4, one of the properties of flexible functional forms is that it places no a priori restrictions on the substitution elasticities.

Classification of the Elasticities of Substitution and Complementarity Table 1 provides a taxonomy of the objective and demand functions that can be used to derive elasticities of substitution for both the gross and net substitution cases for the primal and dual problems. The Elasticity of substitution is the elasticity of the ratio of two inputs to a production (or utility) function with respect to the ratio of their marginal products (or utilities).

In a competitive market, it measures the percentage change in the ratio of two inputs used in response to a percentage change in their prices. It measures the curvature of an isoquant and thus, the. amonginputs,mostliteratureusesthetwo-levelornestedCES(henceforthNCES) productionfunctionsuggested bySato()orthe moreflexibletranslog productionfunctionproposed byChristensen,Jorgenson,andLau().

substitution elasticities between all inputs. To overcome this Sato () extended the CES functional form and suggests the usage of nested CES functions. The general idea behind Sato’s approach is to construct a separate CES function for each group of inputs that share the same substitution elasticity and to combine the different.

relevant for bilateral trade analyses. Armington substitution elasticities refer to the substitution between a domestic and an imported commodity.4 Therefore, the first step in linking the USITC model with the GTAP model is accomplished by providing the former model’s Armington substitution elasticities to the U.S.

component part of the. The use of elasticities of substitution between inputs is a standard method for addressing the effect of a change in the mix of inputs used for production from a technical or cost standpoint.

modern economies, with a special focus on elasticities of substitution between production inputs as capital, labour and energy. I provide a mapping of sectoral production possibility frontiers (PPFs), estimated with an international panel dataset of OECD economies and a quite detailed level of disaggregation.

Jorgenson. Downloadable (with restrictions). This article proposes the way to choose the optimal bundle among inputs by combing the translog cost function and Constant-Elasticity-of-Substitution (CES) function.

The translog cost function is applied to select the most appropriate nested structure by estimating elasticities of substitution between inputs. The results suggest that energy is the least price sensitive among three production factors. The four types of input elasticities (cross-price, Morishima's, Allen and McFadden's shadow elasticity of substitution) show that there are substantial substitution possibilities between energy and capital, while energy and labor have weak substitution.

Cooper et al () addressed marginal rates and elasticities of substitution using the slacks in an additive DEA model.

The optimal slack values can be positive or negative to achieve the. Labor Demand Elasticities I na heated debate broke out among economists and policymakers a book in which they concluded that the predicted job losses associated and more of other inputs (the substitution effect).

Second, when the wage increase causes the marginal costs of production to rise, there are pressures toFile Size: KB. Own price elasticities of demand are all negative. Using the Hicks-Allen elasticity, all pairs of inputs are substitutes except energy and services and energy and materials.

The matrix of Hicks-Allen elasticities is symmetric by design. In general, the degree of substitution is not particularly high except in the case of labor and services. Because the Cobb-Douglas production function entails that the elasticities of substitution among inputs are unitary, there are certain hypotheses it excludes from the first.

For example, Stokey argues ( p. ) that capital and unskilled labor are highly substitutable, while skilled labor (or, we shall say, human capital) is less Author: Roger A.

McCain. Elasticities of Substitution in Nested CES Systems Robert McDougall J Burniaux and Truong [1] cite several times (on pa 20, 24, and 30) a formula from Keller ([3], p equation ()) for elasticities of substitution in nested ces systems.

Unfortunately, the presentation in Burniaux and Truong [1] is not quite clear. Constant elasticity of substitution (CES), in economics, is a property of some production functions and utility functions. Specifically, it arises in a particular type of aggregator function which combines two or more types of consumption goods, or two or more types of production inputs into an aggregate quantity.

In a more general case, when there are many inputs available, the degree of complementarity may be such that the elasticity of substitution is negative, i.e. s inputs invites complications.

Substitution Elasticities in a CES Production Framework labour and energy as inputs. Regarding substitution elasticities he also comes to the conclusion that the usage of a (KL)E. 2 nesting structure is justiﬁed and criticises the widespread use of Cobb-Douglas func-File Size: KB. elasticity of substitution.

The increase of scale of inputs is said produce output efficiently if same output. Prosiding Persidangan Kebangsaan Ekonomi Malaysia Ke V could be produced at the rate where marginal rate of technical substitution (MRTS) equals new ratio of input prices (w/v).

File Size: KB. depends critically on the degree of technical substitution among produc- tion inputs. A hypothesis frequently maintained (though not always explicitly stated) is that elasticities of substitution between capital and labor are zero. The purpose of this chapter is to test to what extent this.

Elasticity of substitution measures how easy it is to substitute product B for product A and vice versa. What exactly "easy" means depends on the context. Usually elasticity of substitution is measured based on the marginal change to a production.(2) is equal to the elasticity of substitution.

Irrespective of the value of the returns-to-scale parameter, the CES production functions for the provinces of Punjab and Sind have the same elasticities of substitution if the coefficients of the logarithms of wages and labour are the same for the two provinces.Weiss, R., "Elasticities of Substitution Among Capital and Occupations in U.S.

Manufacturing," Journal of the American Statistical Association (), THE TRANSLOG PRODUCTION FUNCTION AND VARIABLE RETURNS TO SCALE H. Youn Kim* Abstract-This paper examines existing methods of estimat-ing the translog production function and provides a.