Using Mixtures of Flexible Functional Forms to Estimate Factor Demand Elasticities
Researchers who wish to estimate factor demands using flexible functional forms may now choose from several candidates supplied by the theoretical literature. Unfortunately, the criteria for a priori model selection are not clear. This paper adopts the use of Bayesian methods and argues that there is in fact no need to choose; the optimal strategy is to use a mixture of functional forms to estimate the parameters of interest. Problems of overfitting are avoided by the imposition of the appropriate regulatory conditions. Practical implementation is greatly simplified by the use of Markov chain Monte Carlo techniques. In an example, three well-known functional forms for cost functions are applied to estimate factor demand elasticities in the Canadian manufacturing sector.
Volume (Year): 29 (1996)
Issue (Month): 3 (August)
|Contact details of provider:|| Postal: |
Web page: http://economics.ca/cje/
More information through EDIRC
|Order Information:|| Web: http://economics.ca/en/membership.php Email: |
When requesting a correction, please mention this item's handle: RePEc:cje:issued:v:29:y:1996:i:3:p:717-36. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler)
If references are entirely missing, you can add them using this form.