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Nonlinear optimization method for quantifying the contribution of electricity in the Colombian economic growth, 1925-1997

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  • Oscar Gonzalo Manrique-Díaz

    (Universidad Nacional de Colombia - Sede Medellín)

  • Diego Fernando Lemus-Polanía

    (Universidad Santo Tomás)

Abstract

In this work, electrical energy (E) is included as a third variable in the Cobb-Douglas standard production function, to determine its participation in Colombia's GDP and calculate its associated elasticity between 1925 and 1997. For this purpose, the LINEX model and the Levenberg-Marquardt nonlinear optimization algorithm was used, under the assumption of non-negative production elasticities, to adjust the production function, corrected and based on said model. The analysis is fed by the GDP, capital (K) and labor (L) series prepared by GRECO for Banco de la República, and also by a electrical energy (E) time series produced under the sponsorship of Colciencias. The results calculated for the associated elasticities allow to verify that, in accordance with the known case studies, electrical energy has had a greater weight in the structure of GDP than traditional factors. It is concluded that the constant returns condition of the standard production function does not apply to any known economy, whether it is from a developed country or not

Suggested Citation

  • Oscar Gonzalo Manrique-Díaz & Diego Fernando Lemus-Polanía, 2020. "Nonlinear optimization method for quantifying the contribution of electricity in the Colombian economic growth, 1925-1997," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 93, pages 65-100, Julio-Dic.
    • Handle: RePEc:lde:journl:y:2020:i:93:p:65-100
    DOI: 10.17533/udea.le.n93a341714
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    More about this item

    Keywords

    Economic growth; elasticity of a factor; LINEX production function; nonlinear fitting procedure;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • A10 - General Economics and Teaching - - General Economics - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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