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A cross-country empirical investigation of the aggregate production function specification. (English) Zbl 0967.91028
Summary: Many growth models assume that aggregate output is generated by a Cobb-Douglas production function. In this article we questions the empirical relevance of this specification. We use a panel of 82 countries over a 28-year period to estimate a general constant-elasticity-of-substitution (CES) production function specification. We find that for the entire sample of countries we can reject the Cobb-Douglas specification. When we divide our sample of countries up into several subsamples, we find that physical capital and human capital adjusted labor are more substitutable in the richest group of countries and are less substitutable in the poorest group of countries than would be implied by a Cobb-Douglas specification.

MSC:
91B38 Production theory, theory of the firm
91B62 Economic growth models
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