The Experts below are selected from a list of 306 Experts worldwide ranked by ideXlab platform
Robert S. Chirinko - One of the best experts on this subject based on the ideXlab platform.
-
the Substitution Elasticity factor shares and the low frequency panel model
American Economic Journal: Macroeconomics, 2017Co-Authors: Robert S. Chirinko, Debdulal MallickAbstract:The value of the Elasticity of Substitution between labor and capital (σ) is a crucial assumption in understanding the secular decline in the labor share of income. This paper develops and implements a new strategy for estimating this crucial parameter by combining a low-pass filter with panel data to identify the low-frequency/long-run relations appropriate to production function estimation. Standard estimation methods, which do not filter out transitory variation, generate downwardly biased estimates of 40 percent to 70 percent relative to the benchmark value. Despite correcting for this bias, our preferred estimate of 0.40 is substantially below the Cobb-Douglas assumption of σ = 1.
-
the Substitution Elasticity factor shares long run growth and the low frequency panel model
2016Co-Authors: Robert S. Chirinko, Debdulal MallickAbstract:The value of the Elasticity of Substitution between labor and capital (o) is a “crucial” assumption in understanding the secular decline in the labor share of income and long-run growth. This paper develops and implements a new strategy for estimating this crucial parameter by combining a low-pass filter with panel data to identify the low-frequency/long-run relations appropriate to production function estimation. Using spectral analysis, we assess the extent to which our choices of the critical periodicity and window defining the low-pass filter are successful in emphasizing long-run variation. The empirical results are based on the comprehensive panel industry dataset constructed by Dale Jorgenson and his research associates. Our preferred estimate of o is 0.40. We document that standard estimation methods, which do not filter-out transitory variation, generate downwardly biased estimates. As high frequency variation is introduced into the model variables, o declines by 40% to 70% relative to the benchmark value. Despite correcting for this bias, our preferred estimate is substantially below the Cobb-Douglas assumption of o = 1, and thus implies that the secular decline in the labor share of income cannot be explained by secular increases in the capital/income ratio or secular decreases in the relative price of investment or capital taxation.
-
a new approach to estimating production function parameters the elusive capital labor Substitution Elasticity
Journal of Business & Economic Statistics, 2011Co-Authors: Robert S. Chirinko, Steven M Fazzari, Andrew P MeyerAbstract:Parameters of taste and technology are central to a wide variety of economic models and issues. This article proposes a simple method for estimating production function parameters from panel data, with a particular focus on the Elasticity of Substitution between capital and labor. Elasticity estimates have varied widely, and a consensus estimate remains elusive. Our estimation strategy exploits long-run variation and thus avoids several pitfalls, including difficult-to-specify dynamics, transitory time-series variation, and positively sloped supply schedules, that can bias the estimated Elasticity. Our results are based on an extensive panel comprising 1860 firms. Our approach generates a precisely estimated Elasticity of 0.40. Although existing estimates range widely, we document a remarkable convergence of results from two related approaches applied to a common dataset. The method developed here may prove useful in estimating other structural parameters from panel datasets.
-
The Elasticity of derived demand, factor Substitution, and product demand: Corrections to Hicks' formula and Marshall's Four Rules
Labour Economics, 2011Co-Authors: Robert S. Chirinko, Debdulal MallickAbstract:Abstract The concept of the Elasticity of Substitution between capital and labor, introduced by John Hicks and Joan Robinson over 75 years ago, has had important implications in labor economics and several areas of economic inquiry. In his The Theory of Wages (1932/1963), Hicks developed a formula that has proven very useful in relating the Substitution Elasticity to the derived demand for productive factors, the distribution of factor incomes, and Marshall's Four Rules. This short paper shows that the original and subsequent derivations of Hicks' celebrated formula contained a slip (that factor shares are independent of the Substitution Elasticity and therefore constant), presents a new derivation and a corrected formula, and demonstrates that, with the corrected formula, Marshall's First Rule based on the Substitution Elasticity is no longer generally valid.
-
that elusive Elasticity a long panel approach to estimating the capital labor Substitution Elasticity
2004Co-Authors: Robert S. Chirinko, Steven M Fazzari, Andrew P MeyerAbstract:The Elasticity of Substitution between capital and labor features prominently in several areas of economic research. However, a consensus estimate remains elusive. We develop an estimation strategy that filters panel data in an original way and avoids several pitfalls - difficult-to-specify dynamics, transitory time-series variation, and positively sloped supply schedules - inherent in investment equations that can bias the estimated Elasticity. Results are based on an extensive panel containing 1,860 manufacturing and non-manufacturing firms. Our model generates a precisely estimated Elasticity of approximately 0.40. The method developed here may prove useful in estimating other structural parameters from panel datasets.
Boqiang Lin - One of the best experts on this subject based on the ideXlab platform.
-
how technological progress affects input Substitution and energy efficiency in china a case of the non ferrous metals industry
Energy, 2020Co-Authors: Boqiang Lin, Xing ChenAbstract:Abstract Technological progress leads to factor shares change by changing the marginal productivity of factors or the Substitution Elasticity between factors. This is a key energy issue affecting total factor energy performance. The study used data from 1980 to 2016 of China’s non-ferrous metals industry (CNMI). In the first part, the paper employs ridge regression to study the Substitution effect and technological progress difference among factor inputs. Second, the paper analyzed the impact of technical indexes on energy performance by using the Data Envelopment Approach (DEA)-Malmquist framework. The results show a higher output Elasticity of labor (0.300–0.451) than that of energy (0.289–0.403) and capital (0.230–0.346). China’s non-ferrous metals industry shows labor-biased technological progress. The results indicate the existence of mutual Substitution relations among the three factors. The Substitution Elasticity among input factors shows a convergence trend. The Substitution Elasticity between labor and energy (1.062–1.199) emerge as the highest. This is followed by the Substitution Elasticity of energy for capital. In addition, the technological progress difference between the three inputs become smaller gradually. Whether from the national average or regions, energy performance has improved significantly, which benefits from the impact of technological progress and changes technical efficiency.
-
Energy Substitution Effect on China’s Heavy Industry: Perspectives of a Translog Production Function and Ridge Regression
Sustainability, 2017Co-Authors: Boqiang Lin, Kui LiuAbstract:A translog production function model with input factors including energy, capital, and labor is established for China’s heavy industry. Using the ridge regression method, the output Elasticity of each input factor and the Substitution Elasticity between input factors are analyzed. The empirical results show that the output Elasticity of energy, capital and labor are all positive, while the output elasticities of energy and capital are relatively higher, indicating that China’s heavy industry is energy- and capital-intensive. Simultaneously, all the input factors are substitutes, with the Substitution between labor and energy having the highest degree of responsiveness. The Substitution Elasticity between labor and energy is decreasing, while the Substitution elasticities of capital for energy and labor are increasing. More capital input can help to improve energy efficiency and thus accomplish the goal of energy conservation in China’s heavy industry.
-
estimation of energy Substitution effect in china s machinery industry based on the corrected formula for Elasticity of Substitution
Energy, 2017Co-Authors: Boqiang Lin, Weisheng LiuAbstract:Abstract Characterized with high-energy consumption, China's machinery industry has seen a surge in its energy consumption reaching 540.743 Mtce (million tons of coal equivalent) in 2014, which is about 12.7% of China's total energy consumption. We try to examine inter-factor Substitution towards energy conservation in the Chinese machinery industry by applying the corrected formula. Documented results evidence a significant Substitution relation between energy and capital as well as labor. The estimated Substitution Elasticity between capital and energy is about 1.029 while that of labor and energy stands at 1.030. This is a clear indication that, allocating more capital or labor to China's machinery industry instead of energy will be vital in the CO 2 mitigation effort. Also, a practical scenario estimation to access energy conservation and CO 2 abatement indicates that, a 5% and 10% increase in capital inputs will reduce energy consumption by 27.742 and 55.483 Mtce while CO 2 emissions will reduce by 64.553 and 129.105 Mt respectively in 2014.
-
Analyzing inter-factor Substitution and technical progress in the Chinese agricultural sector
European Journal of Agronomy, 2015Co-Authors: Boqiang Lin, Rilong FeiAbstract:Abstract In this paper, we employ a trans-log production function model for China’s agricultural sector, with capital, labor and energy as input factors. The output Elasticity, Substitution Elasticity and relative difference in technical progress among the factors are analyzed. The results show that during the period 1980–2012 the growth of the agricultural economy in China benefited from the combined effects of factors accumulation and technical progress. Among the factors, the output Elasticity of labor is the largest, followed by capital and energy. Capital, labor and energy are substitutes for one another, but the Elasticity of Substitution between capital and energy is the highest, with a value of 1.1. In the meantime, the relative difference in technical progress among these factors is insignificant and there is a convergence trend over time. We suggest increasing technological innovation in order to improve the contribution of technology progress as well as allocating more capital into the agricultural sector in order to alleviate the shortage of energy supply and the current problem of “hollow” in the rural labor force. This is of great significance to reducing energy consumption and improving the total factor productivity in the China’s agricultural sector.
Ferran Sancho - One of the best experts on this subject based on the ideXlab platform.
-
double dividend effectiveness of energy tax policies and the Elasticity of Substitution a cge appraisal
Energy Policy, 2010Co-Authors: Ferran SanchoAbstract:There is a considerable body of literature that has studied whether or not an adequately designed tax swap, whereby an ecotax is levied and some other tax is reduced while keeping government income constant, may achieve a so-called double dividend, that is, an increase in environmental quality and an increase in overall efficiency. Arguments in favor and against are abundant. Our position is that the issue should be empirically studied starting from an actual, non-optimal tax system structure and by way of checking the responsiveness of equilibria to revenue neutral tax regimes under alternate scenarios regarding technological Substitution. With the use of a CGE model, we find that the most critical Elasticity for achieving a double dividend is the Substitution Elasticity between labor and capital whereas the Elasticity that would generate the highest reduction in carbon dioxide emissions is the Substitution Elasticity among energy goods.
Debdulal Mallick - One of the best experts on this subject based on the ideXlab platform.
-
the Substitution Elasticity factor shares and the low frequency panel model
American Economic Journal: Macroeconomics, 2017Co-Authors: Robert S. Chirinko, Debdulal MallickAbstract:The value of the Elasticity of Substitution between labor and capital (σ) is a crucial assumption in understanding the secular decline in the labor share of income. This paper develops and implements a new strategy for estimating this crucial parameter by combining a low-pass filter with panel data to identify the low-frequency/long-run relations appropriate to production function estimation. Standard estimation methods, which do not filter out transitory variation, generate downwardly biased estimates of 40 percent to 70 percent relative to the benchmark value. Despite correcting for this bias, our preferred estimate of 0.40 is substantially below the Cobb-Douglas assumption of σ = 1.
-
the Substitution Elasticity factor shares long run growth and the low frequency panel model
2016Co-Authors: Robert S. Chirinko, Debdulal MallickAbstract:The value of the Elasticity of Substitution between labor and capital (o) is a “crucial” assumption in understanding the secular decline in the labor share of income and long-run growth. This paper develops and implements a new strategy for estimating this crucial parameter by combining a low-pass filter with panel data to identify the low-frequency/long-run relations appropriate to production function estimation. Using spectral analysis, we assess the extent to which our choices of the critical periodicity and window defining the low-pass filter are successful in emphasizing long-run variation. The empirical results are based on the comprehensive panel industry dataset constructed by Dale Jorgenson and his research associates. Our preferred estimate of o is 0.40. We document that standard estimation methods, which do not filter-out transitory variation, generate downwardly biased estimates. As high frequency variation is introduced into the model variables, o declines by 40% to 70% relative to the benchmark value. Despite correcting for this bias, our preferred estimate is substantially below the Cobb-Douglas assumption of o = 1, and thus implies that the secular decline in the labor share of income cannot be explained by secular increases in the capital/income ratio or secular decreases in the relative price of investment or capital taxation.
-
The Elasticity of derived demand, factor Substitution, and product demand: Corrections to Hicks' formula and Marshall's Four Rules
Labour Economics, 2011Co-Authors: Robert S. Chirinko, Debdulal MallickAbstract:Abstract The concept of the Elasticity of Substitution between capital and labor, introduced by John Hicks and Joan Robinson over 75 years ago, has had important implications in labor economics and several areas of economic inquiry. In his The Theory of Wages (1932/1963), Hicks developed a formula that has proven very useful in relating the Substitution Elasticity to the derived demand for productive factors, the distribution of factor incomes, and Marshall's Four Rules. This short paper shows that the original and subsequent derivations of Hicks' celebrated formula contained a slip (that factor shares are independent of the Substitution Elasticity and therefore constant), presents a new derivation and a corrected formula, and demonstrates that, with the corrected formula, Marshall's First Rule based on the Substitution Elasticity is no longer generally valid.
Helen H Jensen - One of the best experts on this subject based on the ideXlab platform.
-
tariff equivalent of technical barriers to trade with imperfect Substitution and trade costs
World Scientific Book Chapters, 2017Co-Authors: Chengyan Yue, John C Beghin, Helen H JensenAbstract:The price-wedge method yields a tariff-equivalent estimate of technical barriers to trade (TBT). An extension of this method accounts for imperfect Substitution between domestic and imported goods and incorporates recent findings on trade costs. We explore the sensitivity of this revamped TBT estimate to its key determinants (Substitution Elasticity, preference for home good, and trade cost). We use the augmented approach to investigate the recent Japan-U.S. apple trade dispute and find that removing the Japanese TBT would yield limited export gains to the United States. We then draw policy implications of our findings.
-
tariff equivalent of technical barriers to trade with imperfect Substitution and trade costs
2005Co-Authors: Chengyan Yue, John C Beghin, Helen H JensenAbstract:The price-wedge method yields a tariff-equivalent estimate of technical barriers to trade (TBT). An extension of this method accounts for imperfect Substitution between domestic and imported goods and incorporates recent findings on trade costs. We explore the sensitivity of this revamped tariff-equivalent estimate to its determinants (Substitution Elasticity, preference for home good, trade cost, and to the reference data chosen). We use the approach to investigate the ongoing U.S.-Japan apple trade dispute and find that removing the Japanese TBT would yield limited export gains to the United States. We then draw policy implications of our findings.
