Biases in approximating log production
AbstractMost empirical work in economic growth assumes either a Cobb-Douglas production function expressed in logs or a log-approximated constant elasticity of substitution specification. Estimates from each are likely biased due to logging the model and the latter can also suffer from approximation bias. We illustrate this with a successful replication of Masanjala and Papagerogiou (2004) and then estimate both models in levels to avoid these biases. Our estimation in levels gives results in line with conventional wisdom.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.
Volume (Year): 26 (2011)
Issue (Month): 4 (06)
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Web page: http://www.interscience.wiley.com/jpages/0883-7252/
Other versions of this item:
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- C01 - Mathematical and Quantitative Methods - - General - - - Econometrics
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