The Use of Cobb-Douglas and Constant Elasticity of Substitution Utility Functions to Illustrate Consumer Theory

2002 ◽  
Author(s):  
Soumaya M. Tohamy ◽  
J. Wilson Mixon
Keyword(s):  
Utility Functions ◽  
Elasticity Of Substitution ◽  
Consumer Theory ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution

U.S. ELASTICITIES OF SUBSTITUTION AND FACTOR AUGMENTATION AT THE INDUSTRY LEVEL

2012 ◽  
Vol 17 (4) ◽  
pp. 861-897 ◽  
Author(s):  
Andrew T. Young
Keyword(s):  
Manufacturing Sector ◽  
Weighted Average ◽  
Value Added ◽  
The United States ◽  
Large Majority ◽  
Elasticity Of Substitution ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
First Order ◽  
Industry Level

We provide industry-level estimates of the elasticity of substitution (σ) between capital and labor in the United States. We also estimate rates of factor augmentation. Aggregate estimates are produced. Our empirical model comes from the first-order conditions associated with a constant–elasticity of substitution production function. Our data represent 35 industries at roughly the 2-digit SIC level, 1960–2005. We find that aggregate U.S. σ is likely less than 0.620. σ is likely less than unity for a large majority of individual industries. Evidence also suggests that aggregate σ is less than the value-added share-weighted average of industry σ's. Aggregate technical change appears to be net labor–augmenting. This also appears to be true for the large majority of individual industries, but several industries may be characterized by net capital augmentation. When industry-level elasticity estimates are mapped to model sectors, the manufacturing sector σ is lower than that of services; the investment sector σ is lower than that of consumption.

scholarly journals A growth accounting fejlődése a növekedéselméletek tükrében

Competitio ◽  
2011 ◽  
Vol 10 (1) ◽  
pp. 85-103
Author(s):  
Levente Nádasi
Keyword(s):  
Elasticity Of Substitution ◽  
Growth Accounting ◽  
Economic Literature ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution

Jelen írásban röviden bemutatom az egyes növekedéselméletek fejlődését, számba véve az egyes fejlődési szakaszokban a növekedés legfontosabb forrásainak tekintett tényezőket. Mivel a termelési függvény egyik fontos paramétere, a helyettesítési rugalmasság értéke nem egységnyi, ahogyan azt a nemzetközi vizsgálatokban alkalmazott Cobb–Douglas-termelési függvény feltételezi, és a helyettesítési rugalmasság értéke 1-től eltérő is lehet, szükséges egy általánosabb, CES típusú (Constant Elasticity of Substitution – állandó helyettesítési rugalmasságú) „termelési függvény”-család alkalmazása is. Technikai kérdésként felmerül a termelési tényezők csoportosítása is. A helyettesítési rugalmasság egyben hatékonysági tényező is, ezért a termelési függvény ezen jellemzője kiemelt szerepet kap az elemzésben. Végül összefoglalom azokat a legjelentősebb irodalmakat, amelyek főként a növekedés összetételével (growth accounting) foglalkoznak, és megpróbálnak választ találni arra a kérdésre, hogy mely faktorok játszanak jelentős vagy kevésbé jelentős szerepet a gazdasági növekedésben. A growth accounting erősen összekapcsolódik a növekedéselméletekkel, így a megfelelő pontokon visszautalok az egyes növekedéselméletekre is. Journal of Economic Literature (JEL) kód: E13, O47

scholarly journals Substitution between Immigrant and Native Farmworkers in the United States: Does Legal Status Matter?

2019 ◽  
Vol 10 (1) ◽  
Author(s):  
Xuan Wei ◽  
Gülcan Önel ◽  
Zhengfei Guan ◽  
Fritz Roka
Keyword(s):  
United States ◽  
Legal Status ◽  
Substitution Effect ◽  
The United States ◽  
Elasticity Of Substitution ◽  
Immigrant Workers ◽  
Policy Debate ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Unauthorized Immigrant

AbstractThe policy debate surrounding the employment of immigrant workers in U.S. agriculture centers around the extent to which immigrant farmworkers adversely affect the economic opportunities of native farmworkers. To help answer this question, we propose a three-layer nested constant elasticity of substitution (CES) framework to investigate the substitutability among heterogeneous farmworker groups based on age, skill, and legal status utilizing National Agricultural Workers Survey (NAWS) data from 1989 through 2012. We use farmwork experience and type of task performed as alternative proxies for skill to disentangle the substitution effect between U.S. citizens, authorized immigrants, and unauthorized immigrant farmworkers. Results show that substitutability between the three legal status groups is small; neither authorized nor unauthorized immigrant farmworkers have a significant impact on the employment of native farmworkers.

scholarly journals Non-Constant Elasticity of Substitution and Intermittent Renewable Energy

2020 ◽  
Vol 49 (2) ◽  
pp. 321-359
Author(s):  
Saketh Aleti ◽  
Gal Hochman
Keyword(s):  
Renewable Energy ◽  
Economic Value ◽  
Market Price ◽  
Electricity Consumption ◽  
Electricity Sector ◽  
Elasticity Of Substitution ◽  
Carbon Taxes ◽  
Constant Elasticity ◽  
Fossil Energy ◽  
Constant Elasticity Of Substitution

In this article, we present a model of the electricity sector where generation technologies are intermittent. The economic value of an electricity generation technology is given by integrating its production profile with the market price of electricity. We use estimates of the consumer's intertemporal elasticity of substitution for electricity consumption while parameterizing the model empirically to numerically calculate the elasticity between renewables and fossil energy. We find that there is a non-constant elasticity of substitution between renewable and fossil energy that depends on prices and intermittency. This suggests that the efficacy and welfare effects of carbon taxes and renewable subsidies vary geographically. Subsidizing research into battery technology and tailoring policy for local energy markets can mitigate these distributional side effects while complementing traditional policies used to promote renewable energy.

Public Good Provision Financed by Nonlinear Income Tax Under Reduction of Envy

2019 ◽  
Vol 19 (4) ◽  
Author(s):  
Takuya Obara ◽  
Shuichi Tsugawa
Keyword(s):  
Utility Function ◽  
Public Good ◽  
Income Tax ◽  
Optimal Taxation ◽  
Optimal Level ◽  
Elasticity Of Substitution ◽  
Public Good Provision ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Good Provision

Abstract We examine optimal taxation and public good provision by a government that considers reduction of envy as a constraint. We adopt the extended envy-freeness proposed by Diamantaras and Thomson (1990. “A Refinement and Extension of the No-Envy Concept.” Economics Letters 33: 217–22), called λ-equitability. We derive the modified Samuelson rule under an optimal nonlinear income tax and show, using a constant elasticity of substitution utility function, that the direction of distorting the original Samuelson rule to relax the λ envy-free constraint is crucially determined by the elasticity of substitution. Furthermore, we numerically show that the optimal level of provision increases (decreases) in the degree of envy-freeness when the original Samuelson rule is upwardly (downwardly) distorted.

scholarly journals Macroeconomic Growth in Vietnam Transitioned to Market: An Unrestricted VES Framework

Economies ◽  
2020 ◽  
Vol 8 (3) ◽  
pp. 58 ◽  
Author(s):  
Nguyen Ngoc Thach
Keyword(s):  
Economic Growth ◽  
High Speed ◽  
Transition Economy ◽  
Bayes Factor ◽  
Elasticity Of Substitution ◽  
Mcmc Methods ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Labour Share ◽  
The Relationship

The Vietnamese economy has increased at high speed over the transformation decades; however, most recent studies on the economic growth of this country used the Cobb-Douglas or CES (Constant Elasticity of Substitution) production functions, which are unable to explore the relationship between the elasticity of capital-labour substitution and development process, and hence, are not relevant to accessing a dynamic economic system. For that reason, this study is conducted to specify an unrestricted VES (Variable Elasticity of Substitution) production function in a one-sector growth model of Vietnam, highlighted by two characteristics: successful transition from plan to market and rapid progress. The VES is given preference over the CES and the Cobb-Douglas having the elasticity of substitution between capital and labour varying with economic development. By employing a Bayesian nonlinear regression through MCMC methods, the study reported the following findings: (1) the above-unity variable elasticity of capital-labour substitution in an aggregate unrestricted VES function specified for Vietnam shows that the model generates the possibility of endogenous economic growth; (2) the capital share tends to increase, while the labour share faces a downward trend along with the development of Vietnam; (3) the VES is empirically proven through a Bayes factor test to be superior to the CES and Cobb-Douglas for analysis of the growth process of Vietnam, an emerging transition economy.

Using derived demand techniques to estimate Ontario roundwood demand

1983 ◽  
Vol 13 (6) ◽  
pp. 1174-1184 ◽  
Author(s):  
J. C. Nautiyal ◽  
B. K. Singh
Keyword(s):  
Paper Industry ◽  
Forest Products ◽  
Pulp And Paper Industry ◽  
The Other ◽  
Production Functions ◽  
Elasticity Of Substitution ◽  
Lumber Industry ◽  
Constant Elasticity ◽  
Constant Elasticity Of Substitution ◽  
Derived Demand

Derived demand for roundwood created by the three major forest-products industries in Ontario from 1952 to 1980 was estimated from the production functions of the industries. The Cobb–Douglas function represents the lumber and the veneer and plywood industries, and the constant elasticity of substitution (CES) function represents the pulp and paper industry. In all three industries, the derived demand for roundwood is price inelastic. A theorem that the sum of partial price elasticities of derived demand when output of the final product is held constant is equal to zero has been proved. Demand by the lumber industry showed regular fluctuations throughout the 29-year period of study, while that by the other two industries rose steadily except for a few slumps.

Sign in / Sign up

Export Citation Format

Share Document