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Some aspects of the translog production function estimation

Florin Pavelescu ()

Romanian Journal of Economics, 2011, vol. 32, issue 1(41), 131-150

Abstract: In a translog production function, the number of parameters practically ”explodes” as the number of considered production factors increases. Consequently, the shortcoming in the estimation of the respective production function is the occurrence of collinearity. Theoretically, the collinearity impact is minimum if a single production factor is taken into account. In this case, we can determine not only the output elasticity but also the elasticity of scale related to the respective production factor. In the present paper, we demonstrate that the relationship between the output elasticity and estimated average elasticity of scale depends on the dynamics trajectory of the production factor, underexponential and overexponential, respectively. At the end, a practical example is offered, dealing with the computation of the Gross Domestic Product elasticity and average elasticity of scale related to employed population in the United Kingdom and France during 1999-2009.

Keywords: estimation constraints; informational energy; translog multiplier; augmented output elasticity related to a production factor. (search for similar items in EconPapers)
JEL-codes: C13 C20 C51 C52 (search for similar items in EconPapers)
Date: 2011
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