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Substitution elasticities in an energy-augmented CES production function: An empirical analysis for Turkey

Author

Listed:
  • Merve KÜÇÜK

    (Institute for Climate Resilience, Fondazione CMCC, Venice Marghera, Italy.)

  • Gürkan KUMBAROÄžLU

    (Department of Industrial Engineering, Boğaziçi University, Istanbul, Turkey.)

  • Kemal SARICA

    (Department of Industrial Engineering, Işık University, Şile, Istanbul, Turkey.)

Abstract

This study estimates a production function for Turkey taking capital, labour and energy as input factors. The production function estimated is of the CES form with Hicks-neutral technology and constant returns to scale. A nonlinear least squares regression is employed on a dataset for the entire Turkish economy covering a time period of 27 years. The production function parameters provide insights into the elasticity of substitution of capital, labour and energy in Turkey. In particular, it is found that the elasticity of substitution between the capital-labour bundle and energy is 0.645, slightly higher than values found in other studies for various countries.

Suggested Citation

  • Merve KÜÇÜK & Gürkan KUMBAROÄžLU & Kemal SARICA, 2018. "Substitution elasticities in an energy-augmented CES production function: An empirical analysis for Turkey," Journal of Economics and Political Economy, EconSciences Journals, vol. 5(2), pages 234-249, July.
    • Handle: RePEc:cvv:journ1:v:5:y:2018:i:2:p:234-249
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    References listed on IDEAS

    as
    1. Kemfert, Claudia, 1998. "Estimated substitution elasticities of a nested CES production function approach for Germany," Energy Economics, Elsevier, vol. 20(3), pages 249-264, June.
    2. Valentina Bosetti & Carlo Carraro & Marzio Galeotti & Emanuele Massetti & Massimo Tavoni, 2006. "WITCH. A World Induced Technical Change Hybrid Model," Working Papers 2006_46, Department of Economics, University of Venice "Ca' Foscari".
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    4. Paul E. Brockway & Matthew K. Heun & João Santos & John R. Barrett, 2017. "Energy-Extended CES Aggregate Production: Current Aspects of Their Specification and Econometric Estimation," Energies, MDPI, vol. 10(2), pages 1-23, February.
    5. Arne Henningsen & Géraldine Henningsen, 2011. "Econometric Estimation of the “Constant Elasticity of Substitution" Function in R: Package micEconCES," IFRO Working Paper 2011/9, University of Copenhagen, Department of Food and Resource Economics.
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General

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