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On Estimation of the Normalized CES Production Function for Turkey

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  • Selen Baser Andic

Abstract

This paper estimates a normalized constant elasticity of substitution production function for Turkey using the data between 1991-2014. Employing a system approach, the elasticity of substitution, direction of the technical change and total factor productivity are determined. The results indicate that elasticity of substitution is around 0.8 and significantly below unity in Turkey. The dynamics of the technical progresses of inputs signal a slowing productivity growth in labour, and a falling productivity in capital. These findings imply that in Turkey, the average growth of the total factor productivity is very low, if not zero, and labour-augmenting technical progress is slightly dominant over time.

Suggested Citation

  • Selen Baser Andic, 2016. "On Estimation of the Normalized CES Production Function for Turkey," Working Papers 1613, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    • Handle: RePEc:tcb:wpaper:1613
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    File URL: https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Publications/Research/Working+Paperss/2016/16-13
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    More about this item

    Keywords

    CES function; Elasticity of substitution; Technical change; Factor shares; Turkey;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution

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