The South African aggregate production function: Estimation of the constant elasticity of substitution function

Lumengo Bonga-Bonga

doi:10.1111/j.1813-6982.2009.01208.x

The South African aggregate production function: Estimation of the constant elasticity of substitution function

Lumengo Bonga-Bonga

School of Economics

Research output: Contribution to journal › Article › peer-review

5 Citations (Scopus)

Abstract

This paper assesses the validity of the constant elasticity of substitution (CES) and the Cobb-Douglas (CD) production functions in modelling the aggregate production function and computing the total factor productivity (TFP) in South Africa for the period 1970-2006. The CES function is estimated with Nerlove's two-step procedure using the autoregressive distributed lag (ARDL) cointegration and the Kalman filter estimation techniques, while the CD production function is estimated using the Kalman filter technique. The results of the forecast performance of the two model specifications show that the CD specification outperforms the CES for the period 1970-2006, although the CD specification may be too restrictive.

Original language	English
Pages (from-to)	332-349
Number of pages	18
Journal	South African Journal of Economics
Volume	77
Issue number	2
DOIs	https://doi.org/10.1111/j.1813-6982.2009.01208.x
Publication status	Published - 2009

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

SDG 8 Decent Work and Economic Growth

Keywords

ARDL cointegration
Aggregate production function
CES
Kalman filter
Production scale

ASJC Scopus subject areas

Economics and Econometrics

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10.1111/j.1813-6982.2009.01208.x

Cite this

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AB - This paper assesses the validity of the constant elasticity of substitution (CES) and the Cobb-Douglas (CD) production functions in modelling the aggregate production function and computing the total factor productivity (TFP) in South Africa for the period 1970-2006. The CES function is estimated with Nerlove's two-step procedure using the autoregressive distributed lag (ARDL) cointegration and the Kalman filter estimation techniques, while the CD production function is estimated using the Kalman filter technique. The results of the forecast performance of the two model specifications show that the CD specification outperforms the CES for the period 1970-2006, although the CD specification may be too restrictive.

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The South African aggregate production function: Estimation of the constant elasticity of substitution function

Abstract

UN SDGs

Keywords

ASJC Scopus subject areas

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