A class of changing elasticity of substitution production functions |
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Authors: | Jürgen Antony |
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Institution: | 1. CPB Netherlands Bureau for Economic Policy Analysis, Van Stolkweg 14, 2585 JR, The Hague, The Netherlands 2. University of Augsburg, Universit?tsstra?e 16, 86159, Augsburg, Germany
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Abstract: | This paper presents a new class of production functions with a changing elasticity of substitution between two input factors.
Over a freely chosen number of intervals for the input factor intensity freely chosen elasticities of substitution can be
imposed. The resulting production function can thus account for changing elasticities of substitution during the development
of the factor intensity. The production function is applied in a calibration exercise and a novel normalization procedure
is proposed. The theory behind this production technology builds on the functional normalization of CES production functions. |
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Keywords: | |
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