Some aspects of the translog production function estimation
AbstractIn a translog production function, the number of parameters practically ”explodes” as the number of considered production factors increases. Consequently, the shortcoming in the estimation of the respective production function is the occurrence of collinearity. Theoretically, the collinearity impact is minimum if a single production factor is taken into account. In this case, we can determine not only the output elasticity but also the elasticity of scale related to the respective production factor. In the present paper, we demonstrate that the relationship between the output elasticity and estimated average elasticity of scale depends on the dynamics trajectory of the production factor, underexponential and overexponential, respectively. At the end, a practical example is offered, dealing with the computation of the Gross Domestic Product elasticity and average elasticity of scale related to employed population in the United Kingdom and France during 1999-2009.
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Bibliographic InfoArticle provided by Institute of National Economy in its journal Romanian Journal of Economics.
Volume (Year): 32 (2011(XXI))
Issue (Month): 1(41) (June)
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estimation constraints; informational energy; translog multiplier; augmented output elasticity related to a production factor.;
Find related papers by JEL classification:
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
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