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A Cross-Country Empirical Investigation of the Aggregate Production Function Specification

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  • Duffy, John
  • Papageorgiou, Chris

Abstract

Many growth models assume that aggregate output is generated by a Cobb-Douglas production function. In this article we question the empirical relevance of this specification. We use a panel of 82 countries over a 28-year period to estimate a general constant-elasticity-of-substitution (CES) production function specification. We find that for the entire sample of countries we can reject the Cobb-Douglas specification. When we divide our sample of countries up into several subsamples, we find that physical capital and human capital adjusted labor are more substitutable in the richest group of countries and are less substitutable in the poorest group of countries than would be implied by a Cobb-Douglas specification. Copyright 2000 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Economic Growth.

Volume (Year): 5 (2000)
Issue (Month): 1 (March)
Pages: 87-120

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Handle: RePEc:kap:jecgro:v:5:y:2000:i:1:p:87-120

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Web page: http://www.springerlink.com/link.asp?id=102931

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  1. Nehru, Vikram & Swanson, Eric & Dubey, Ashutosh, 1995. "A new database on human capital stock in developing and industrial countries: Sources, methodology, and results," Journal of Development Economics, Elsevier, vol. 46(2), pages 379-401, April.
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  8. Lichtenberg, Frank R. & Pottelsberghe de la Potterie, Bruno v., 1998. "International R&D spillovers: A comment," European Economic Review, Elsevier, vol. 42(8), pages 1483-1491, September.
  9. Griliches, Zvi & Hausman, Jerry A., 1986. "Errors in variables in panel data," Journal of Econometrics, Elsevier, vol. 31(1), pages 93-118, February.
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