Estimation of parameters of constant elasticity of substitution production functional model

• Published in: IOP conference series. Materials Science and Engineering 2017-11, Vol.263 (4), p.42121
• Main Authors: Mahaboob, B, Venkateswarlu, B, Ravi Sankar, J
• Format: Article
• Language: English
• Subjects: Econometrics; Economic models; Elasticity; Parameter estimation; Regression models; Rounding; Substitutes
• ISSN: 1757-8981; 1757-899X
• DOI: 10.1088/1757-899X/263/4/042121

Nonlinear model building has become an increasing important powerful tool in mathematical economics. In recent years the popularity of applications of nonlinear models has dramatically been rising up. Several researchers in econometrics are very often interested in the inferential aspects of nonlinear regression models [6]. The present research study gives a distinct method of estimation of more complicated and highly nonlinear model viz Constant Elasticity of Substitution (CES) production functional model. Henningen et.al [5] proposed three solutions to avoid serious problems when estimating CES functions in 2012 and they are i) removing discontinuities by using the limits of the CES function and its derivative. ii) Circumventing large rounding errors by local linear approximations iii) Handling ill-behaved objective functions by a multi-dimensional grid search. Joel Chongeh et.al [7] discussed the estimation of the impact of capital and labour inputs to the gris output agri-food products using constant elasticity of substitution production function in Tanzanian context. Pol Antras [8] presented new estimates of the elasticity of substitution between capital and labour using data from the private sector of the U.S. economy for the period 1948-1998.