Nonlinear optimization method for quantifying the contribution of electricity in the Colombian economic growth, 1925-1997

Oscar Gonzalo Manrique-Díaz () and Diego Fernando Lemus-Polanía ()
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Oscar Gonzalo Manrique-Díaz: Universidad Nacional de Colombia - Sede Medellín
Diego Fernando Lemus-Polanía: Universidad Santo Tomás

Lecturas de Economía, 2020, issue 93, 65-100

Abstract: In this work, electrical energy (E) is included as a third variable in the Cobb-Douglas standard production function, to determine its participation in Colombia's GDP and calculate its associated elasticity between 1925 and 1997. For this purpose, the LINEX model and the Levenberg-Marquardt nonlinear optimization algorithm was used, under the assumption of non-negative production elasticities, to adjust the production function, corrected and based on said model. The analysis is fed by the GDP, capital (K) and labor (L) series prepared by GRECO for Banco de la República, and also by a electrical energy (E) time series produced under the sponsorship of Colciencias. The results calculated for the associated elasticities allow to verify that, in accordance with the known case studies, electrical energy has had a greater weight in the structure of GDP than traditional factors. It is concluded that the constant returns condition of the standard production function does not apply to any known economy, whether it is from a developed country or not

Keywords: Economic growth; elasticity of a factor; LINEX production function; nonlinear fitting procedure (search for similar items in EconPapers)
JEL-codes: A10 C33 C61 O47 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:lde:journl:y:2020:i:93:p:65-100

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DOI: 10.17533/udea.le.n93a341714

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