 The Aggregate Production Function: 'Not Even Wrong'Jesus Felipe () and John McCombie Review of Political Economy, 2014, vol. 26, issue 1, 60-84 Abstract: The foundations of the aggregate production function were long ago thrown into doubt by problems of aggregation and the Cambridge capital theory controversies. Yet the aggregate production function, whether in the familiar form of the Cobb-Douglas, the CES, or the translog, continues to be widely used in both theoretical and applied analysis. The reason for its continued use rests on the instrumental position that 'it works'. The aggregate production function sometimes yields good statistical fits with plausible estimates of the coefficients. However, for some time, it has been realised that the existence of an underlying accounting identity can explain the regression results, even if the aggregate production function does not exist. This argument has been widely ignored. This paper, drawing on a rhetorical approach, assesses why this is the case. It shows that the few criticisms that have been made of the critique involve fundamental misunderstandings that represent a failure of the economic method. Date: 2014 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:revpoe:v:26:y:2014:i:1:p:60-84 Ordering information: This journal article can be ordered from DOI: 10.1080/09538259.2013.874192 Access Statistics for this article Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon More articles in Review of Political Economy from Taylor & Francis Journals |
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