Choosing an Empirical Production Function: Theory, Nonnested Hypotheses, Costs of Specifications

Harry H. Hall

No 31977, Agricultural Economics Research Reports from University of Kentucky, Department of Agricultural Economics

Abstract: This paper considers the specification of a production function, using crop-yield response to agricultural lime as an example. The paper first reviews neoclassical production theory, observing that this theory specifies neither the form nor the arguments of a production function. Several functions that are consistent with the theory are then evaluated by goodness-of-fit tests, by nonnested-hypothesis tests, and by "costs of misspecification." Neither goodness-of-fit tests nor nonnested-hypothesis tests provide a clear choice among the candidate functions; costs of misspecification provide some choice.

Keywords: Production; Economics (search for similar items in EconPapers)
Pages: 36
Date: 1998-08
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:ukyaer:31977

DOI: 10.22004/ag.econ.31977

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