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Panel estimation of sectoral substitution elasticities for CES production functions

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  • Michal Antoszewski

Abstract

This paper provides a broad range of econometric estimates of substitution elasticities for 35 sectoral nested CES production functions. Although the related empirical literature has been growing over the recent years, there is still no single study focused on a large-scale estimation of various sectoral elasticities with a use of a common database and methodology. This paper constitutes an attempt to fill this gap. Panel data techniques, with the World Input-Output Database (WIOD) as the main data source. Estimation results suggest a significant heterogeneity in elasticity values between various activity sectors, as well as between various nests of production function. It also turns out that, in most cases, obtained long-run elasticities are higher than in the short run, as well as significantly different from zero (Leontief specification) and unity (Cobb-Douglas specification). In addition, time series properties of panel data (stationarity and cointegration) play a crucial role in determining the type of dynamic model (autoregressive distributed lag model, error correction model or model for differenced series) to be estimated for a particular nest-sector combination and, in turn, in determining the obtained values of elasticity estimates.

Suggested Citation

  • Michal Antoszewski, 2017. "Panel estimation of sectoral substitution elasticities for CES production functions," EcoMod2017 10160, EcoMod.
    • Handle: RePEc:ekd:010027:10160
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    Cited by:

    1. Michał Antoszewski, 2019. "Assessment of Energy-Related Technological Shocks Within a CGE Model for the Polish Economy," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 1, pages 9-45.

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    More about this item

    Keywords

    EU + non-EU developed countries; Macroeconometric modeling; General equilibrium modeling (CGE);
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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