Aggregate Production Functions: Some CES Experiments

Production Functions Having the Ces Property

To what measure does the CES (constant elasticity of substitution) property determine production functions? We show that it is not possible to find explicitly all two variable production functions f(x, y) having the CES property. This slightly generalizes the result of R. Sato [16]. We show that if a production function is a quasi-sum then the CES property determines only the functional forms o...

The Calibration of CES Production Functions

This note addresses some issues that arise when using “normalized” CES production functions, an approach that has become popular in the literature. The results of Klump and de La Grandville (2000) provide a simple way to calibrate the parameters of the CES production function when the necessary data are available. But some of the other applications of normalized CES production functions appear ...

An Assessment of CES and Cobb-Douglas Production Functions

This paper surveys the empirical and theoretical literature on macroeconomic production functions and assesses whether the constant elasticity of substitution (CES) or the CobbDouglas specification is more appropriate for use in the CBO’s macroeconomic forecasts. The Cobb-Douglas’s major strengths are its ease of use and its seemingly good empirical fit across many data sets. Unfortunately, the...

Calibration of normalised CES production functions in dynamic models

Normalising CES production functions in the calibration of basic dynamic models allows to choose technology parameters in an economically plausible way. When variations in the elasticity of substitution are considered, normalisation is necessary in order to exclude arbitrary effects. As an illustration, the effect of the elasticity of substitution on the speed of convergence in the Ramsey model...

The Existence of Aggregate Production Functions