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The Calibration of CES Production Functions

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  • Jonathan R. W. Temple

Abstract

This note addresses some issues that arise when using 'normalized' CES production functions, an approach that has become popular in the literature. The results of Klump and de La Grandville (2000) provide a simple way to calibrate the parameters of the CES production function when the necessary data are available. But some of the other applications of normalized CES production functions appear problematic, especially when used to argue that productivity is increasing in the elasticity of substitution.

Suggested Citation

  • Jonathan R. W. Temple, 2008. "The Calibration of CES Production Functions," Bristol Economics Discussion Papers 08/606, School of Economics, University of Bristol, UK.
    • Handle: RePEc:bri:uobdis:08/606
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    More about this item

    Keywords

    CES production functions; elasticity of substitution; normalization;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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