Estimation of Zellner-Revankar Production Function Revisited
Arnold Zellner and Nagesh Revankar in their well-known paper “Generalized Production Functions” [The Review of Economic Studies, 36(2), pp. 241-250, 1969] introduced a new generalized production function, which was illustrated by an example of fitting the generalized Cobb-Douglas function to the U.S. data for Transportation Equipment Industry. For estimating the parameters of their production function, they used a method in which one of the parameters (theta) is chosen at the trial basis and other parameters relating to elasticity and returns to scale are estimated so as to maximize the likelihood function. Repeated trials are made with different values of theta so as to obtain the global maximum of the likelihood function. In this paper we show that the method suggested and used by Zellner and Revankar (ZR) may easily be caught into a local optimum trap. We also show that the estimated parameters reported by them are grossly sub-optimal. Using the Differential Evolution (DE) and the Repulsive Particle Swarm (RPS) methods of global optimization, the present paper re-estimates the parameters of the ZR production function with the U.S. data used by ZR. We find that the DE and the RPS estimates of parameters are significantly different from (but much better than) those estimated by ZR. We also find that the returns to scale do not vary with the size of output as reported by ZR.
|Date of creation:||10 Dec 2006|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC
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.:
- Mishra, SK, 2006. "A Note on Numerical Estimation of Sato’s Two-Level CES Production Function," MPRA Paper 1019, University Library of Munich, Germany, revised 02 Dec 2006.
- Zellner, A & Revankar, N S, 1969. "Generalized Production Functions," Review of Economic Studies, Wiley Blackwell, vol. 36(106), pages 241-50, April.
- Mishra, SK, 2006.
"Estimation of Zellner-Revankar Production Function Revisited,"
1172, University Library of Munich, Germany.
- SK Mishra, 2007. "Estimation of Zellner-Revankar Production Function Revisited," Economics Bulletin, AccessEcon, vol. 3(14), pages 1-7.
- Mishra, SK, 2006. "Global Optimization by Differential Evolution and Particle Swarm Methods: Evaluation on Some Benchmark Functions," MPRA Paper 1005, University Library of Munich, Germany.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:1172. 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: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.