Work

Normalizing VES production functions: extending the supply-side system approach

Year: 2025

Type: article

Abstract: This paper extends the Klump et al. (2007) normalization procedure to Variable Elasticity of Substitution (VES) production functions. Normalization addresses identification issues in VES model estimation, allowing joint estimation of substitution elasticities and factor-augmenting technical change, while offering a tractable extension of the normalized supply-side system that bridges the gap between CES and more flexible VES specifications.

Source: Economics Letters

DOI: 10.1016/j.econlet.2025.112794

Authors: Fernando Del Río, Francisco Rebelo

Institution: Universidade Católica Portuguesa

Language: English

Topic: Economic Growth and Productivity

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $3,030