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- Title
THE SOUTH AFRICAN AGGREGATE PRODUCTION FUNCTION: ESTIMATION OF THE CONSTANT ELASTICITY OF SUBSTITUTION FUNCTION.
- Authors
BONGA-BONGA, LUMENGO
- Abstract
This paper assesses the validity of the constant elasticity of substitution (CES) and the Cobb-Douglas (CD) production functions in modelling the aggregate production function and computing the total factor productivity (TFP) in South Africa for the period 1970-2006. The CES function is estimated with Nerlove's two-step procedure using the autoregressive distributed lag (ARDL) cointegration and the Kalman filter estimation techniques, while the CD production function is estimated using the Kalman filter technique. The results of the forecast performance of the two model specifications show that the CD specification outperforms the CES for the period 1970-2006, although the CD specification may be too restrictive.
- Subjects
SOUTH Africa; SOUTH Africans; CAPITAL productivity; SUBSTITUTION (Economics); FACTORS of production; ECONOMIC indicators; STOCHASTIC processes; ECONOMIES of scale; PRODUCTION (Economic theory)
- Publication
South African Journal of Economics, 2009, Vol 77, Issue 2, p332
- ISSN
0038-2280
- Publication type
Article
- DOI
10.1111/j.1813-6982.2009.01208.x