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Multifactor CES elasticity and productivity growth : a cross-sectional approach

Author

Listed:
  • Kim, Jiyoung
  • Nakano, Satoshi
  • Nishimura, Kazuhiko

Abstract

Sector-wise productivity growth is measured, along with the sectoral elasticity of substitution, under the multifactor CES framework by regressing the growth of factor-wise cost shares against the growth of relative factor prices. We use linked input–output tables for Japan and Korea as the data sources for factor price and cost shares in two temporally distant states. We then construct a multisectoral general equilibrium model using the system of estimated CES unit cost functions and evaluate the economy-wide distribution of exogenous productivity gains in terms of welfare. Further, we examine the differences between models based on a priori elasticities such as the Leontief and the Cobb–Douglas systems.

Suggested Citation

  • Kim, Jiyoung & Nakano, Satoshi & Nishimura, Kazuhiko, 2017. "Multifactor CES elasticity and productivity growth : a cross-sectional approach," IDE Discussion Papers 632, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper632
    as

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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Productivity; Input-output tables; East Asia; Japan; South Korea; Productivity Growth; Multi-Factor CES; Elasticity of Substitution; General Equilibrium; Linked Input-Output Tables;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models

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