La fonction de production et les données canadiennes
This study has two aspects. First, the author examines the theoretical properties of the constant elasticity of substitution (CES) production function and the implications of this formulation for the properties of a structural macroeconomic model. He then seeks to determine whether Canadian macroeconomic data correlate better with a CES production function with an elasticity of substitution between labour and capital equal to one, which would be the case with a Cobb-Douglas function, or with a CES function whose elasticity of substitution is different from one. Cobb-Douglas-type production functions have some very attractive properties, which is probably why they are so widely used in macroeconomic models. Referring to results from previous studies, the author demonstrates that it is possible to retain these properties when using a CES production function with an elasticity of substitution different from one, provided it features constant returns to scale and that technological progress only increases the efficiency of the labour factor. In terms of empirical analysis, the estimation frameworks used in this study and applied to Canadian macroeconomic data yield an elasticity of substitution of capital for labour lying between 0.4 and 0.6, or well below one. Most of the tests reject use of the Cobb-Douglas formulation for representing Canadian data. These results suggest that capital and labour are much more complementary than is assumed by a Cobb-Douglas production function.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: 613 782-8845
Fax: 613 782-8874
Web page: http://www.bank-banque-canada.ca/
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.:
- Kongsamut, Piyabha & Rebelo, Sergio & Xie, Danyang, 2001.
"Beyond Balanced Growth,"
Review of Economic Studies,
Wiley Blackwell, vol. 68(4), pages 869-82, October.
- Sergio Rebelo & Piyabha Kongsamut & Danyang Xie, 2001. "Beyond Balanced Growth," IMF Working Papers 01/85, International Monetary Fund.
- Kongsamut, Piyabha & Rebelo, Sérgio & Xie, Danyang, 1997. "Beyond Balanced Growth," CEPR Discussion Papers 1693, C.E.P.R. Discussion Papers.
- Kongsamut, P. & Rebelo, S. & Xie, D., 1997. "Beyong Balanced Growth," RCER Working Papers 438, University of Rochester - Center for Economic Research (RCER).
- Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 1997. "Beyond Balanced Growth," NBER Working Papers 6159, National Bureau of Economic Research, Inc.
- Campbell, John & Perron, Pierre, 1991.
"Pitfalls and Opportunities: What Macroeconomists Should Know about Unit Roots,"
3374863, Harvard University Department of Economics.
- John Y. Campbell & Pierre Perron, 1991. "Pitfalls and Opportunities: What Macroeconomists Should Know About Unit Roots," NBER Chapters, in: NBER Macroeconomics Annual 1991, Volume 6, pages 141-220 National Bureau of Economic Research, Inc.
- Campbell, J.Y. & Perron, P., 1991. "Pitfalls and Opportunities: What Macroeconomics should know about unit roots," Papers 360, Princeton, Department of Economics - Econometric Research Program.
- John Y. Campbell & Pierre Perron, 1991. "Pitfalls and Opportunities: What Macroeconomists Should Know About Unit Roots," NBER Technical Working Papers 0100, National Bureau of Economic Research, Inc.
- James H. Stock & Mark W. Watson, 1991.
"A simple estimator of cointegrating vectors in higher order integrated systems,"
Working Paper Series, Macroeconomic Issues
91-3, Federal Reserve Bank of Chicago.
- Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July.
- Caballero, Ricardo J, 1994. "Small Sample Bias and Adjustment Costs," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 52-58, February.
- Coletti, D. & Hunt, B. & Rose, D. & Tetlow, R., 1996. "The Bank of Canada's New Quarterly Projection Model. Part 3 , the Dynamic Model : QPM," Technical Reports 75, Bank of Canada.
When requesting a correction, please mention this item's handle: RePEc:bca:bocawp:05-20. 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: ()
If references are entirely missing, you can add them using this form.