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The calibration of CES production functions

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  • Temple, Jonathan

Abstract

The CES production function is increasingly prominent in macroeconomics and growth economics. This paper distinguishes between different uses of “normalized” CES functions, an approach that has become popular in the literature. The results of Klump and La Grandville (2000) provide a simple way to calibrate the parameters of the CES production function when the necessary data are available. But some of the other applications of normalized CES production functions are problematic, especially when the approach is said to isolate the theoretical effects of varying the elasticity of substitution.

Suggested Citation

  • Temple, Jonathan, 2012. "The calibration of CES production functions," Journal of Macroeconomics, Elsevier, vol. 34(2), pages 294-303.
  • Handle: RePEc:eee:jmacro:v:34:y:2012:i:2:p:294-303
    DOI: 10.1016/j.jmacro.2011.12.006
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    More about this item

    Keywords

    CES production functions; Elasticity of substitution; Normalization; Calibration;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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