Price deflators and the estimation of the production function
The use of industry indices to deflate nominal revenues and expenditure in intermediary inputs has been found to lead to lower scale estimates of the production function. This paper proposes a new approach to solve the estimation biases due to the use of industry deflators which relies on the use of the firms' labour cost.
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- Tor Jakob Klette & Zvi Griliches, 1992. "The Inconsistency of Common Scale Estimators When Output Prices Are Unobserved and Engogenous," NBER Working Papers 4026, National Bureau of Economic Research, Inc.
- Tor Jakob Klette & Zvi Griliches, 1994. "The Inconsistency of Common Scales Estimators when Output Prices are Unobserved and Endogenous," Discussion Papers 127, Statistics Norway, Research Department.
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