Estimation of sectoral elasticities of substitution along the international technology frontier

Claudio Baccianti

No 13-092, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: Sectoral heterogeneity is crucial to address several economic questions. This paper provides a detailed mapping of sectoral production possibility frontiers, using different nesting structures and levels of aggregation (primary, secondary, tertiary activities and energy-intensive firms). Elasticities of substitution between capital, labour and energy are identified by employing an international multi-sector dataset, accounting for biased technological change and normalising the production function to clusters of observations. Complementarity dominates, with the noteworthy exception of the capital-labour composite, close to Cobb-Douglas. I also present some stylized facts relating substitution elasticities to sectoral characteristics.

Keywords: Constant Elasticity of Substitution; Normalisation; Sectoral Disaggregation; Nested CES Structure; Energy Demand (search for similar items in EconPapers)
JEL-codes: C68 O14 O41 Q43 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:13092

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