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Long-Run Elasticity of the Substitution in the Slovak Economy

In: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Dubrovnik, Croatia, 7-9 September 2017

Author

Listed:
  • Szomolányi, Karol
  • Lukáčik, Martin
  • Lukáčiková, Adriana

Abstract

The value of the Slovak long-run elasticity substitution is relatively slow – about 0.10. It follows from the estimate of low-frequency econometric model. Econometric form is given by the capital demand derived from the first-order conditions of the firm maximizing its profit. Due to the robustness we use different measures of the economic variables. The basic data gathered from the National Bank of Slovakia data portal consists of the real and nominal output, nominal capital, output price and different interest rates. A challenge is to find real capital time series. One way is to use a net investment deflator computed from the real and nominal gross fixed investment and the consumption of the fixed capital. The low-pass filter of data series is used to measure the long-run value of variables.

Suggested Citation

  • Szomolányi, Karol & Lukáčik, Martin & Lukáčiková, Adriana, 2017. "Long-Run Elasticity of the Substitution in the Slovak Economy," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2017), Dubrovnik, Croatia, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Dubrovnik, Croatia, 7-9 September 2017, pages 228-232, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    • Handle: RePEc:zbw:entr17:183779
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    References listed on IDEAS

    as
    1. Marianne Baxter & Robert G. King, 1999. "Measuring Business Cycles: Approximate Band-Pass Filters For Economic Time Series," The Review of Economics and Statistics, MIT Press, vol. 81(4), pages 575-593, November.
    2. Robert J. Barro & Xavier Sala-i-Martin, 2003. "Economic Growth, 2nd Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262025531, December.
    3. Robert S. Chirinko & Debdulal Mallick, 2014. "The Substitution Elasticity, Factor Shares, Long-Run Growth, and the Low-Frequency Panel Model," CESifo Working Paper Series 4895, CESifo.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    long-run elasticity of substitution; low-pass data filter; Slovak economy; capital demand; first order condition of the profit maximising firm;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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