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  • Analytický komentár

Factor Efficiency in CES Production Function

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    Benčík Michal
    starší výskumný pracovník
13 dec 2019
Constant Elasticity of Substitution production function allows us, compared with a Cobb-Douglas function, to model different efficiency trends of labour and capital, and to model the private and public sectors independently. We also find a function with separate trends based on Box-Cox transformations outperforms capturing technological progress by a single exponential trend. Labour and capital efficiency gains in our preferred model are stable or increasing over time in the private sector, whereas they are gradually decreasing in the public sector. The elasticity of substitution between labour and capital is significantly greater than zero, but also lower than one half.