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GTAP Resources: Resource Display

GTAP Resource #6535

"Empirical estimates of the elasticity of substitution of a KLEM production function without nesting constraints: The case of the Variable Output Elasticity-Cobb Douglas"
by Malliet, Paul and Frédéric G. Reynès

The outcome of Computable General Equilibrium models applied to climate crucially rely on the estimation of elasticities of substitution. We use a generalized production function that overcomes the restriction imposed by a nesting structure of the Constant Elasticity of Substitution (CES) production function assumed in most CGE models.
Constructing a panel of 44 countries and 14 periods from the World Input-Output Database (WIOD) tables, we estimate the production functions for 54 sectors using a \textit{Seemingly Unrelated Regression} model. We compare these results to two standard KLEM nesting structures used in CES specification and find direct implications on the estimation results, especially for Capital-Energy substitutability. The more general form of the CES production function on which we rely, the Variable Output Elasticity-Cobb Douglas (VOE-CB) supports substitution between these two inputs.

Resource Details (Export Citation) GTAP Keywords
Category: 2022 Conference Paper
Status: Not published
By/In: Presented during the 25th Annual Conference on Global Economic Analysis (Virtual Conference)
Date: 2022
Created: Malliet, P. (4/13/2022)
Updated: Batta, G. (5/30/2022)
Visits: 428
- Advances in quantitative methods
- Calibration and parameter estimation
- Model extension/development
- Econometric methods

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