IDEAS home Printed from https://ideas.repec.org/p/boi/wpaper/2009.07.html
   My bibliography  Save this paper

Testing for Constant Returns to Scale and Perfect Competition in the Israeli Economy, 1980-2006

Author

Listed:
  • Joseph Djivre

    () (Bank of Israel)

  • Yigal Menashe

    () (Bank of Israel)

Abstract

In this paper we test the hypothesis of constant returns to scale and no market power, implementing Hall's test (1988, 1991) on Israeli annual real business-sector GDP data. The results validate the hypothesis of perfect competition at the aggregate level. Thus on the one hand they justify the imposition of the CRS restriction when estimating the business-sector GDP production function in Israel and on the other, they contradict the assumption of CRS with market power and fixed entry costs in the modeling of the Israeli economy.

Suggested Citation

  • Joseph Djivre & Yigal Menashe, 2009. "Testing for Constant Returns to Scale and Perfect Competition in the Israeli Economy, 1980-2006," Bank of Israel Working Papers 2009.07, Bank of Israel.
  • Handle: RePEc:boi:wpaper:2009.07
    as

    Download full text from publisher

    File URL: ftp://repec-boi.northeurope.cloudapp.azure.com/RePEc/boi/wpaper/WP_2009.07.pdf
    File Function: First version, 2009
    Download Restriction: no

    More about this item

    Keywords

    returns to scale; market power; TFP; Solow residual; capacity utilization;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:boi:wpaper:2009.07. 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: (Dafna Koby). General contact details of provider: http://edirc.repec.org/data/boigvil.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.