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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


Abstract
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
Version:
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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