Estimation of Zellner-Revankar Production Function Revisited
Zellner and Revankar in their paper “Generalized Production Functions” introduced a production function, which was illustrated by fitting the generalized Cobb-Douglas function to the U.S. data for Transportation Equipment Industry. For estimating the production function, they used a method in which one of the parameters (theta) is repeatedly chosen at the trial basis and other parameters are estimated so as to obtain the global optimum of the likelihood function. We show that this method of Zellner and Revankar (ZR) is caught into a local optimum trap and the estimated parameters reported by ZR are somewhat sub-optimal. Using the Differential Evolution (DE) and the Repulsive Particle Swarm (RPS) methods, we re-estimate the parameters of the ZR production function with data used by ZR and show that our estimates of parameters are better than those of ZR. We also find that the returns to scale do not vary with the size of output in the manner reported by ZR.
Volume (Year): 3 (2007)
Issue (Month): 14 ()
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- Mishra, SK, 2006.
"Estimation of Zellner-Revankar Production Function Revisited,"
1172, University Library of Munich, Germany.
- SK Mishra, 2007. "Estimation of Zellner-Revankar Production Function Revisited," Economics Bulletin, AccessEcon, vol. 3(14), pages 1-7.
- A. Zellner & N. S. Revankar, 1969. "Generalized Production Functions," Review of Economic Studies, Oxford University Press, vol. 36(2), pages 241-250.
- Mishra, SK, 2006. "Global Optimization by Differential Evolution and Particle Swarm Methods: Evaluation on Some Benchmark Functions," MPRA Paper 1005, University Library of Munich, Germany.
- Mishra, SK, 2006. "A Note on Numerical Estimation of Sato’s Two-Level CES Production Function," MPRA Paper 1019, University Library of Munich, Germany, revised 02 Dec 2006.
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