Contemporary Relevance and Ongoing Controversies Related to the CES Production Function
The CES specification has been an important watershed in the development of the production function and its applications over the past fifty years. While the original formulation and estimation were rooted in sound economic theory many issues have been unresolved. In particular, the economic sources of the elasticity of substitution and the meaning of the ``returns to scale'' parameter remained ambiguous. Similarly, the efficient method of estimating the elasticity of substitution is as yet not clear. The primary reason is that several proposed methods of estimating the non-linear CES function did not pay attention to the economic decision processes underlying the observed choices from which estimation begins. Despite these shortcomings substitution and its applications have been so important that a whole lot of applications have been conceptualized. Several important insights have been recorded from the empirical work. However, it was found that the elasticity of substitution concept must be supplemented, or supplanted altogether, by several other explanations, equally rooted in economic theory and well documented empirical regularities, to provide a complete understanding of empirical phenomena. We may need many more years to finally decide which of the developments are worthwhile and which ones deserve discarding. It may take another genius of the stature of Minhas to steer the research out its current turbulence.
Volume (Year): 9 (2011)
Issue (Month): 2 (July)
|Contact details of provider:|| Web page: http://www.jqe.co.in/societyhome.html|
More information through EDIRC
|Order Information:|| Postal: Managing Editor, Journal of Quantitative Economics, Indira Gandhi Institute of Development Research (IGIDR), Gen. A.K. Vaidya Marg, Goregaon (E), Mumbai 400 065 , INDIA|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Montoro Carlos, 2007.
"Oil Shocks and Optimal Monetary Policy,"
2007-010, Banco Central de Reserva del Perú.
- Mishra, SK, 2007.
"A Brief History of Production Functions,"
5254, University Library of Munich, Germany.
- Andreas Irmen, 2010.
"Steady-State Growth and the Elasticity of Substitution,"
CREA Discussion Paper Series
10-21, Center for Research in Economic Analysis, University of Luxembourg.
- Irmen, Andreas, 2011. "Steady-state growth and the elasticity of substitution," Journal of Economic Dynamics and Control, Elsevier, vol. 35(8), pages 1215-1228, August.
- Andreas Irmen, 2010. "Steady-State Growth and the Elasticity of Substitution," CESifo Working Paper Series 2955, CESifo Group Munich.
- Andreas Irmen, 2011. "Steady-state growth and the elasticity of substitution," Post-Print hal-00828979, HAL.
- Irmen, Andreas, 2010. "Steady-State Growth and the Elasticity of Substitution," Working Papers 0496, University of Heidelberg, Department of Economics.
- Ari Hyytinen & Mika Maliranta, 2008. "When Do Employees Leave Their Job for Entrepreneurship?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(1), pages 1-21, 03.
- Juergen Antony, 2007.
"A Dual Elasticity of Substitution Production Function with an Application to Cross Country Inequality,"
031, Bavarian Graduate Program in Economics (BGPE).
- Antony, Jürgen, 2009. "A dual elasticity of substitution production function with an application to cross-country inequality," Economics Letters, Elsevier, vol. 102(1), pages 10-12, January.
- Juergen Antony, 2007. "A Dual Elasticity of Substitution Production Function with an Application to Cross Country Inequality," Discussion Paper Series 294, Universitaet Augsburg, Institute for Economics.
- Aiyar, Shekhar & Dalgaard, Carl-Johan, 2009.
"Accounting for productivity: Is it OK to assume that the world is Cobb-Douglas?,"
Journal of Macroeconomics,
Elsevier, vol. 31(2), pages 290-303, June.
- Shekhar Aiyar & Carl-Johan Dalgaard, 2008. "Accounting for Productivity: Is it OK to Assume that the World is Cobb-Douglas?," Discussion Papers 08-14, University of Copenhagen. Department of Economics.
- Kai Sun & Daniel J. Henderson & Subal C. Kumbhakar, 2011.
"Biases in approximating log production,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 26(4), pages 708-714, 06.
- BRECHET, Thierry & LAMBRECHT, Stéphane, .
"Renewable resource and capital with a joy-of-giving resource bequest motive,"
CORE Discussion Papers RP
2434, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Bréchet, Thierry & Lambrecht, Stéphane, 2011. "Renewable resource and capital with a joy-of-giving resource bequest motive," Resource and Energy Economics, Elsevier, vol. 33(4), pages 981-994.
- Hippu Salk Kristle Nathan & Srijit Mishra, 2010.
"Progress in human development: Are we on the right path?,"
Indira Gandhi Institute of Development Research, Mumbai Working Papers
2010-010, Indira Gandhi Institute of Development Research, Mumbai, India.
- Hippu Salk Kristle Nathan & Srijit Mishra, 2010. "Progress in human development: Are we on the right path?," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 3(3), pages 199-221.
- Hippu Salk Kristle Nathan & Srijit Mishra, 2010. "Progress in Human Development - Are we on the right path?," Development Economics Working Papers 23019, East Asian Bureau of Economic Research.
- Timothy J. Richards & Stephen F. Hamilton, 2006. "Rivalry in Price and Variety among Supermarket Retailers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 710-726.
- Söderbom, Måns & Weng, Qian, 2012.
"Multi-product firms, product mix changes and upgrading: Evidence from China's state-owned forest areas,"
China Economic Review,
Elsevier, vol. 23(4), pages 801-818.
- Söderbom, Måns & Weng, Qian, 2012. "Multi-product firms, product mix changes and upgrading: Evidence from China's state-owned forest areas," Working Papers in Economics 525, University of Gothenburg, Department of Economics.
- 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.
- Chemmanur, Thomas J. & Yan, An, 2004. "A theory of corporate spin-offs," Journal of Financial Economics, Elsevier, vol. 72(2), pages 259-290, May.
- Thompson, Henry, 2011. "Estimating the Heckscher-Ohlin model: Inverting the inverse matrix," International Review of Economics & Finance, Elsevier, vol. 20(2), pages 185-192, April.
- Juillard, Michel & Villemot, Sébastien, 2011.
"Multi-country real business cycle models: Accuracy tests and test bench,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 35(2), pages 178-185, February.
- Michel Juillard & Sébastien Villemot, 2011. "Multi-country real business cycle models: Accuracy tests and test bench," Post-Print hal-00813056, HAL.
- Michel Juillard & Sébastien Villemot, 2010. "Multi-country real business cycle models: Accuracy tests and test bench," Post-Print hal-00765827, HAL.
- Dupuy, Arnaud & de Grip, Andries, 2006. "Elasticity of substitution and productivity, capital and skill intensity differences across firms," Economics Letters, Elsevier, vol. 90(3), pages 340-347, March.
- Winston W. Chang, 2012. "Monopolistic Competition And Product Diversity: Review And Extension," Journal of Economic Surveys, Wiley Blackwell, vol. 26(5), pages 879-910, December.
When requesting a correction, please mention this item's handle: RePEc:jqe:jqenew:v:9:y:2011:i:2:p:36-57. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (D. M. Nachane)or ()
If references are entirely missing, you can add them using this form.