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### Estimation of Restricted Cobb-Douglas Production Function

Posted: **Fri Aug 06, 2010 4:49 pm**

by **Imran Ali**

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.

### Re: Estimation of Restricted Cobb-Douglas Production Function

Posted: **Fri Aug 06, 2010 5:00 pm**

by **startz**

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.

### Re: Estimation of Restricted Cobb-Douglas Production Function

Posted: **Sun Aug 08, 2010 8:18 am**

by **Imran Ali**

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.

### Re: Estimation of Restricted Cobb-Douglas Production Function

Posted: **Sun Aug 08, 2010 10:29 am**

by **startz**

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)

### Re: Estimation of Restricted Cobb-Douglas Production Function

Posted: **Tue Aug 10, 2010 3:38 am**

by **Imran Ali**

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

### Re: Estimation of Restricted Cobb-Douglas Production Function

Posted: **Tue Aug 10, 2010 8:12 am**

by **startz**

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

### Re: Estimation of Restricted Cobb-Douglas Production Function

Posted: **Tue Aug 10, 2010 11:13 pm**

by **trubador**

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.

### Re: Estimation of Restricted Cobb-Douglas Production Functio

Posted: **Thu Jun 30, 2016 8:06 am**

by **alinapop**

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?

### Re: Estimation of Restricted Cobb-Douglas Production Functio

Posted: **Thu Jun 30, 2016 8:25 am**

by **startz**

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

### Re: Estimation of Restricted Cobb-Douglas Production Functio

Posted: **Fri Jul 01, 2016 11:58 pm**

by **alinapop**

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

### Re: Estimation of Restricted Cobb-Douglas Production Functio

Posted: **Sat Jul 02, 2016 6:44 am**

by **startz**

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

### Re: Estimation of Restricted Cobb-Douglas Production Functio

Posted: **Wed Apr 25, 2018 5:02 pm**

by **pka**

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

### Re: Estimation of Restricted Cobb-Douglas Production Function

Posted: **Wed Apr 25, 2018 5:31 pm**

by **startz**

### Re: Estimation of Restricted Cobb-Douglas Production Function

Posted: **Fri May 04, 2018 12:40 am**

by **pka**

startz wrote:View/Wald statistic

Hello Startz,

Many thanks indeed for your valuable help.

Much appreciated.

Kind regards.