The Normalized CES Production Function: Theory and Empirics

By R. Klump, Peter Mcadam, Alpo Willman. Social Science Research Network, 2011

239 citations recorded by the source corpus.

The elasticity of substitution between capital and labor and, in turn, the direction of technical change are critical parameters in many fields of economics. Until recently, though, the application of production functions with non-unitary substitution elasticities (i.e., non Cobb Douglas) was hampered by empirical and theoretical uncertainties. As has recently been revealed, JEL Classification: C22, E23, E25, O30, O51

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/505e29ec3a736a2d0657a17a97c1f7a6cece492c

Citations in the corpus

• Getting Normalization Right: Dealing with ‘Dimensional Constants’ in Macroeconomics (2012, unknown): “As discussed in Klump and Preissler (2000) and Klump et al. (2011) in the literature different ways of expressing the CES production function have been used6 with the one proposed by Arrow et al. (1961), Yt = C [ α(ZKtKt) ψ + (1 − α)(ZNtNt) ψ ] 1 ψ (2) probably being the most used.”
• The cross-section of labor leverage and equity returns (2016, unknown): “See Klump et al. (2012) and references therein to find studies that support the strict complementarity between labor and capital in a number of countries around the world. See Oberfield and Raval (2014) for a recent study about the US manufacturing sector that finds an average elasticity of .”