Calibration of normalised CES production functions in dynamic models

Normalising CES production functions allows to choose technology parameters of dynamic models in a plausible way and excludes arbitrary effects of changes in the elasticity of substitution. As an illustration, the speed of convergence in the Ramsey model is considered.

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Bibliographic Details
Published in:Economics letters 2008-05, Vol.99 (2), p.256-259
Main Authors: Klump, Rainer, Saam, Marianne
Format: Article
Language:English
Subjects:
Calibration
CES production functions
Dynamics
Economic models
Normalisation
Production functions
Ramsey model
Standardization
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Description
Summary:Normalising CES production functions allows to choose technology parameters of dynamic models in a plausible way and excludes arbitrary effects of changes in the elasticity of substitution. As an illustration, the speed of convergence in the Ramsey model is considered.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2007.07.001