			Home About us Contact

Constant Elasticity (constant + elasticity)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	80%

Selected Abstracts

Efficiency Gaps, Love of Variety and International Trade

ECONOMICA, Issue 269 2001
Catia Montagna
We develop a general equilibrium monopolistic competition model of trade with technical heterogeneity among firms and countries. With free entry, technical asymmetries between firms result in the endogenous determination of the equilibrium average efficiency of the industry. We show that trade reduces (increases) the minimum efficiency required to survive in the more (less) efficient country. This has important welfare implications: (1) Contrary to the constant elasticity of substitution homogeneous-firms model, trade affects welfare even when there is no love of variety. (2) There are circumstances in which trade liberalization leads to a loss of consumer welfare. [source]

A new class of production functions and an argument against purely labor-augmenting technical change

INTERNATIONAL JOURNAL OF ECONOMIC THEORY, Issue 4 2008
Jakub Growiec
E23; O30; O40 This paper derives the macro-level production function from idea-based microfoundations. Labor-augmenting and capital-augmenting developments are assumed to be Pareto-distributed and mutually dependent. Using the Clayton copula family to capture this dependence, a new "Clayton,Pareto" class of production functions is derived that nests both the Cobb,Douglas and the constant elasticity of substitution. In the most general case, technical change is not purely labor-augmenting over the long run, but it augments both capital and labor. Under certain parametrizations, the derived elasticity of substitution between capital and labor exceeds unity and, therefore, gives rise to long-run endogenous growth. [source]

A new production function estimate of the euro area output gap,

JOURNAL OF FORECASTING, Issue 1-2 2010
Matthieu Lemoine
Abstract We develop a new version of the production function (PF) approach for estimating the output gap of the euro area. Assuming a CES (constant elasticity of substitution) technology, our model does not call for any (often imprecise) measure of the capital stock and improves the estimation of the trend total factor productivity using a multivariate unobserved components model. With real-time data, we assess this approach by comparing it with the Hodrick,Prescott (HP) filter and with a Cobb,Douglas PF approach with common cycle and implemented with a multivariate unobserved components model. Our new PF estimate appears highly concordant with the reference chronology of turning points and has better real-time properties than the univariate HP filter for sufficiently long time horizons. Its inflation forecasting power appears, like the other multivariate approach, less favourable than the statistical univariate method. Copyright © 2009 John Wiley & Sons, Ltd. [source]

Batch process and transfer decisions in foreign market: a real options model

APPLIED STOCHASTIC MODELS IN BUSINESS AND INDUSTRY, Issue 2 2003
Chin-Tsai Lin
Abstract This investigation extends the constant elasticity of substitution (CES) batch process production model of Lin et al. (J. Management syst. 2002; 9: 173) for an uncertain exchange rate by considering an export-oriented manufacturer who can decide to switch freely between domestic and foreign locations. The export-oriented manufacturer is risk averse and has rational expectations. As the entry cost declines, the export-oriented manufacturer's entry trigger for the CES production function increases for transferring from a domestic and to a foreign location. Additionally, the manufacturer's exit trigger for CES production function increases for transferring from a foreign and to a domestic location. Moreover, the exit cost resembles the entry cost. Copyright © 2002 John Wiley & Sons, Ltd. [source]

The Equilibrium Yen,Dollar Rate: 1976,91

ASIAN ECONOMIC JOURNAL, Issue 1 2002
Anthony De Carvalho
This paper presents a definition of the equilibrium exchange rate that is based on a modified version of purchasing power parity (PPP) for traded goods. Employing constant elasticity of substitution (CES) production functions and data from 28 three-digit international standard industrial classification (ISIC) manufacturing industries, the equilibrium Yen-Dollar rate is calculated for the period between 1976 and 1991 (a time in which the Yen appreciated markedly against the Dollar) showing that the actual Yen-Dollar rate closely tracked the equilibrium rate over that time. The results suggest that strong growth in Japanese labor productivity, coupled with Japan's relatively low capital-labor elasticity of sub-stitution, were the main contributors to the Yen's long-run appreciation. [source]