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Multifactor CES general equilibrium: Models and applications


  • Kim, Jiyoung
  • Nakano, Satoshi
  • Nishimura, Kazuhiko


Sector-specific multifactor CES elasticities of substitution and the corresponding productivity growth are jointly measured by regressing the growth of per-factor cost shares against the growth of factor prices. We use linked input-output tables for Japan and the Republic of Korea as the data source for factor price and cost shares in two temporally distant states. We then construct a multisectoral general equilibrium model using the system of estimated CES unit cost functions and evaluate the economy-wide propagation of an exogenous productivity stimulus in terms of welfare. Further, we examine the differences between models based on a priori elasticities such as Leontief and Cobb-Douglas.

Suggested Citation

  • Kim, Jiyoung & Nakano, Satoshi & Nishimura, Kazuhiko, 2017. "Multifactor CES general equilibrium: Models and applications," Economic Modelling, Elsevier, vol. 63(C), pages 115-127.
  • Handle: RePEc:eee:ecmode:v:63:y:2017:i:c:p:115-127 DOI: 10.1016/j.econmod.2017.01.024

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    References listed on IDEAS

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    Cited by:

    1. Frieling, Julius & Madlener, Reinhard, 2017. "Fueling the US Economy: Energy as a Production Factor from the Great Depression until Today," FCN Working Papers 2/2017, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).


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