Multifactor CES General Equilibrium: Models and Applications

Jiyoung Kim, Satoshi Nakano and Kazuhiko Nishimura

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Abstract: Sector specific multifactor CES elasticity of substitution and the corresponding productivity growths are jointly measured by regressing the growths of factor-wise cost shares against the growths of factor prices. We use linked input-output tables for Japan and the Republic of Korea as the data source for factor price and cost shares in two temporally distant states. We then construct a multi-sectoral general equilibrium model using the system of estimated CES unit cost functions, and evaluate the economy-wide propagation of an exogenous productivity stimuli, in terms of welfare. Further, we examine the differences between models based on a priori elasticity such as Leontief and Cobb-Douglas.

Date: 2016-08, Revised 2017-01
New Economics Papers: this item is included in nep-cse and nep-eff
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Published in Economic Modelling 2017

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Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1608.01365

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