A Note on the Simple Two-Variable CES Transaction Function in Macroeconomic Rationing Models

Eskil Heinesen

No 92-08, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: In recent years a large number of macroeconomic rationing models with CES transaction functions have been estimated. In this paper we examine the derivation of the simple aggregate CES transaction functin with two arguments from assumptions on the distribution on demand and supply across micro markets. The main purpose of the paper is to show rigorously that this CES transaction function has basically the same properties as the "exact" transaction function in case of lognormally distributes demand and supply.

Pages: 7 pages
Date: 1992-07
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:9208

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