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A Bayesian Time-Varying Coefficient Model for Cobb–Douglas Production Function

Author

Listed:
  • Jongwoo Choi

    (University of Connecticut
    ROK Army HQs)

  • Seongil Jo

    (Inha University)

  • Jaeoh Kim

    (Inha University)

Abstract

This paper proposes a Bayesian varying coefficient model to estimate parameters exhibiting time-dependence in the Cobb–Douglas (CD) production function. We expand upon the classical CD production function by incorporating time-varying properties to enable more sophisticated modeling. We utilize a flexible and efficient Bayesian approach-based computational algorithm for statistical inference in the constrained parameter space, where the sum of model elasticities must be less than 1. The proposed model is applied to four real datasets from macroeconomics, as well as various social science issues broadly covered by the CD production function. The real data applications demonstrate the effectiveness of the proposed model in estimating underlying time-varying effects for parameters in the CD production function.

Suggested Citation

  • Jongwoo Choi & Seongil Jo & Jaeoh Kim, 2025. "A Bayesian Time-Varying Coefficient Model for Cobb–Douglas Production Function," Computational Economics, Springer;Society for Computational Economics, vol. 65(3), pages 1429-1455, March.
    • Handle: RePEc:kap:compec:v:65:y:2025:i:3:d:10.1007_s10614-024-10598-1
    DOI: 10.1007/s10614-024-10598-1
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    References listed on IDEAS

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    3. Miguel A. León-Ledesma & Peter McAdam & Alpo Willman, 2010. "Identifying the Elasticity of Substitution with Biased Technical Change," American Economic Review, American Economic Association, vol. 100(4), pages 1330-1357, September.
    4. Lyu, Syu-Jyun Larry & White, Fred C. & Lu, Yao-Chi, 1984. "Estimating Effects Of Agricultural Research And Extension Expenditures On Productivity: A Translog Production Function Approach," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 16(2), pages 1-8, December.
    5. Eric Miller, 2008. "An Assessment of CES and Cobb-Douglas Production Functions: Working Paper 2008-05," Working Papers 19992, Congressional Budget Office.
    6. Zhang, Qichen & Dong, Weihong & Wen, Chuanlei & Li, Tong, 2020. "Study on factors affecting corn yield based on the Cobb-Douglas production function," Agricultural Water Management, Elsevier, vol. 228(C).
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