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Macroeconomic Production Functions for Eastern Europe


  • Kyn, Oldrich
  • Kyn, Ludmila


This paper was presented in June 1974 at the Symposium ―On the Measurement of Factor Productivities‖ at the castle Reisensburg in Bavaria, and was published in the book of proceedings from this Symposium. It contains results of several years of research about the economies of six East European countries, namely Czechoslovakia, Poland, Hungary, East Germany, Bulgaria and Rumania. Data on output, capital and labor for 15 – 20 branches of industry and 17 – 20 years were collected for each of the mentioned countries. About 40 different models of production function were estimated using time series, cross-section, and combined time series and cross-section regression analysis. Because the time series regressions were run for each industrial branch in every country and cross-section regressions were run for each year across all branches in every country and almost always 40 different versions of production function were estimated, several thousand regressions were run all together. The results showed that in most cases the production functions had usual form with constant returns to scale and close to unit elasticity of substitution between capital and labor. However the most interesting result was relatively high original but steadily declining growth rate of total factor productivity (technical progress). This indicated that within 10 to 20 future years Eastern Europe would be tremendously lagging behind the West.

Suggested Citation

  • Kyn, Oldrich & Kyn, Ludmila, 1974. "Macroeconomic Production Functions for Eastern Europe," MPRA Paper 23221, University Library of Munich, Germany, revised 08 Jun 2010.
  • Handle: RePEc:pra:mprapa:23221

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    References listed on IDEAS

    1. Weitzman, Martin L, 1970. "Soviet Postwar Economic Growth and Capital-Labor Substitution," American Economic Review, American Economic Association, vol. 60(4), pages 676-692, September.
    2. Maddala, G S, 1971. "The Likelihood Approach to Pooling Cross-Section and Time-Series Data," Econometrica, Econometric Society, vol. 39(6), pages 939-953, November.
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    More about this item


    Estimates of production functions; East European countries;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models


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