Partial Elasticity of Substitution of the CES Production Function with n-Factors Model: Definitions and its Implication to Empirical Studies  

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Jenis: Article from Journal - ilmiah nasional - tidak terakreditasi DIKTI - atma jaya
Dalam koleksi: Jurnal Ekonomi dan Bisnis vol. 1 no. 1 (Feb. 2001), page 1-14.
Topik: Conditional Factors Demand; Partial Elasticity of Substitution; Production Function

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Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ100.1 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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The key discussion of this paper is to verify formally rather than heuristic the ideal concepts of partial elasticity of substitution with n-factors model of production. Allen-Uzawa’s formalization is considered as a main building block for the discussion purpose. Two approximation methods, i.e., dynamic modeling and definition of conditional factors demand, are introduced for approaching the value of elasticity of substitution and passing up the limitations of Uzawa’s CES model. Those limitations, i.e., (i) the elasticity of substitution between all pairs of factors are equal or (ii) the elasticity between factors differ, but the elasticity between at least one pair is -1, can be noticeably detriment for conducting an empirical studies. Despite the fact that these approximations take into account, investigating on how restrictive is Uzawa’s CES model also introduced for further theoretical judgment in utilizing this model empirically.

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