Estimation of Restricted Cobb-Douglas Production Function

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Imran Ali
Posts: 3
Joined: Wed Feb 03, 2010 9:00 pm

Estimation of Restricted Cobb-Douglas Production Function

Postby Imran Ali » Fri Aug 06, 2010 4:49 pm

How I can estimate the restricted Cobb-Douglas Production Function with three factor inputs of the form:

Y = A*(K^alpha)(L^beta)(N^gamma); alpha + beta + gamma = 1
where
Y = Output
K = Capital
L = Labor, and
N = Land

Please help me out with the estimating of this function in Eviews.

startz
Non-normality and collinearity are NOT problems!
Posts: 3376
Joined: Wed Sep 17, 2008 2:25 pm

Re: Estimation of Restricted Cobb-Douglas Production Function

Postby startz » Fri Aug 06, 2010 5:00 pm

You can take logs and do a linear regression or you can do a nonlinear regression.

Perhaps you should tell what us you've done so far and where you got stuck.

Imran Ali
Posts: 3
Joined: Wed Feb 03, 2010 9:00 pm

Re: Estimation of Restricted Cobb-Douglas Production Function

Postby Imran Ali » Sun Aug 08, 2010 8:18 am

Thanks for your comments.

Given function:

Y = A*(K^alpha)*(N^beta)*(L^gemma)
where,
K = Capital
N = Labour
L = Land
and, given restriction:

alpha + beta + gemma = 1

I want to run a regression of the form.

log(Y) = A + (1 - beta - gemma)*log(K) + (1-alpha - gemma)*log(N) + (1-alpha - beta)*log(L)

I failed to run this regression in Eviews.

Please help me either with the estimation of the function in Eviews and with the functional form.

Thanks.

startz
Non-normality and collinearity are NOT problems!
Posts: 3376
Joined: Wed Sep 17, 2008 2:25 pm

Re: Estimation of Restricted Cobb-Douglas Production Function

Postby startz » Sun Aug 08, 2010 10:29 am

Imran Ali wrote:Thanks for your comments.

Given function:

Y = A*(K^alpha)*(N^beta)*(L^gemma)
where,
K = Capital
N = Labour
L = Land
and, given restriction:

alpha + beta + gemma = 1

I want to run a regression of the form.

log(Y) = A + (1 - beta - gemma)*log(K) + (1-alpha - gemma)*log(N) + (1-alpha - beta)*log(L)

I failed to run this regression in Eviews.

Please help me either with the estimation of the function in Eviews and with the functional form.

Thanks.

In EViews, coefficients are named c(1), c(2), etc., rather than "beta,"

so you want to do something like
log(y) = c(1) +c(2)*log(k) + c(3)*log(N) + (1-c(2)-c(3))*log(L)

Imran Ali
Posts: 3
Joined: Wed Feb 03, 2010 9:00 pm

Re: Estimation of Restricted Cobb-Douglas Production Function

Postby Imran Ali » Tue Aug 10, 2010 3:38 am

Once again thanks for your help. But my this does not solve my problem. See if i run this regression i did not get the sum of all three coefficients equal to one. So please tell me if there's any problem with the functional form. How do I specify the Cobb-Douglass Production function with three inputs and neutral technology in the Eviews. Regards

startz
Non-normality and collinearity are NOT problems!
Posts: 3376
Joined: Wed Sep 17, 2008 2:25 pm

Re: Estimation of Restricted Cobb-Douglas Production Function

Postby startz » Tue Aug 10, 2010 8:12 am

Maybe you should post exactly what you are doing, so people can take a look.

trubador
Did you use forum search?
Posts: 1518
Joined: Thu Nov 20, 2008 12:04 pm

Re: Estimation of Restricted Cobb-Douglas Production Function

Postby trubador » Tue Aug 10, 2010 11:13 pm

The discussion under the Putting limits on estimated coefficient values thread might help. Please always do a simple search before posting your questions, since they may have already been answered somewhere in the forum.

alinapop
Posts: 2
Joined: Thu Jun 30, 2016 7:51 am

Re: Estimation of Restricted Cobb-Douglas Production Functio

Postby alinapop » Thu Jun 30, 2016 8:06 am

HI,
i want to estimate a translog cost function and I need to put some restrictions, I used the following model
log(y) = c(1) +c(2)*log(k) + c(3)*log(N) + (1-c(2)-c(3))*log(L)
I get the cofficient for c(1), c(2), c(3)
For (1-c(2)-c(3))*log(L) am I suppose to just do 1 minus the results for the two coefficient?

startz
Non-normality and collinearity are NOT problems!
Posts: 3376
Joined: Wed Sep 17, 2008 2:25 pm

Re: Estimation of Restricted Cobb-Douglas Production Functio

Postby startz » Thu Jun 30, 2016 8:25 am

Those don't look like the right restrictions for a Cobb-Douglas.

alinapop
Posts: 2
Joined: Thu Jun 30, 2016 7:51 am

Re: Estimation of Restricted Cobb-Douglas Production Functio

Postby alinapop » Fri Jul 01, 2016 11:58 pm

this si the translog cost function
ln(C(q;wL,wK,wM)) = c + cq * ln(q) + cL * ln(wL) + cK * ln(wK) + cM * log(wM)
+ .5 * [dqq * ln(q)^2 + dLL * ln(wL)^2 + dKK * ln(wK)^2 + dMM * ln(wM)^2]
+ .5 * [(dLK + dKL) * ln(wL)*ln(wK) + (dLM + dML) * ln(wL)*ln(wM) + (dKM + dMK) * ln(wK)*log(wM)]
+ dLq * ln(wL)*ln(q) + dKq * ln(wK)*ln(q) + dMq * ln(wM)*ln(q)
and the restrictions are:
1 = cL + cK + cM
0 = dLL + dLK + dLM
0 = dKL + dKK + dKM
0 = dML + dMK + dMM
0 = dLq + dKq + dMq
0 = dLq, 0 = dKq, 0 = dMq, 1 = cq

startz
Non-normality and collinearity are NOT problems!
Posts: 3376
Joined: Wed Sep 17, 2008 2:25 pm

Re: Estimation of Restricted Cobb-Douglas Production Functio

Postby startz » Sat Jul 02, 2016 6:44 am

Then yes, "c(4)" = 1 -c(2) -c(3)

pka
Posts: 4
Joined: Wed Apr 25, 2018 1:54 pm

Re: Estimation of Restricted Cobb-Douglas Production Functio

Postby pka » Wed Apr 25, 2018 5:02 pm

Hello,

I am running a regression with a linear restriction on a coefficient as in

Y = alpha*X1 + beta*X2 + (1-alpha-beta)*X3 + error

Eviews only returns the estimates for alpha and beta as well as their standard errors.

To get the estimate of the coefficient for X3, I do manually 1-alpha-beta.

However, how do I compute the standard error of this paramater?

Thanks

startz
Non-normality and collinearity are NOT problems!
Posts: 3376
Joined: Wed Sep 17, 2008 2:25 pm

Re: Estimation of Restricted Cobb-Douglas Production Function

Postby startz » Wed Apr 25, 2018 5:31 pm

View/Wald statistic

Code: Select all

0=1-alpha-beta

pka
Posts: 4
Joined: Wed Apr 25, 2018 1:54 pm

Re: Estimation of Restricted Cobb-Douglas Production Function

Postby pka » Fri May 04, 2018 12:40 am

startz wrote:View/Wald statistic

Code: Select all

0=1-alpha-beta


Hello Startz,

Many thanks indeed for your valuable help.

Much appreciated.

Kind regards.


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