Dear all,
How do I estimate a Cobb-Douglas production function under the assumption of constant returns to scale?
So the production function must be Y=(K^alpha)*L^(1-beta) such that alpha+beta=0 . In other words, instead of taking the logs and estimating the function and deciding if there is a constant, increasing or decreasing returns, I want to restrict the function such that there is constant returns. Is there an estimation called "resticted estimation" or something like that?
Thank you all.
CD production function under constant returns to scale
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Re: CD production function under constant returns to scale
Where you have beta in the estimation command, substitute in (-alpha).Dear all,
How do I estimate a Cobb-Douglas production function under the assumption of constant returns to scale?
So the production function must be Y=(K^alpha)*L^(1-beta) such that alpha+beta=0 . In other words, instead of taking the logs and estimating the function and deciding if there is a constant, increasing or decreasing returns, I want to restrict the function such that there is constant returns. Is there an estimation called "resticted estimation" or something like that?
Thank you all.
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