|
|
|
|
||||
|
||||
The Elasticity of Substitution: Evidence from a UK Firm-Level Data SetSebastian N. BarnesOrganization for Economic Co-Operation and Development (OECD) - Economics Department (ECO) Simon PriceCity University London - Department of Economics; Bank of England Maria BarrielBank of England - Monetary Analysis April 1, 2008 Bank of England Working Paper No. 348 Abstract: Using a panel of UK firms spanning three decades, we provide estimates of the long-run elasticity of substitution between capital and other factors of production, the (negative of the) elasticity of capital and investment with respect to the user cost. The parameter is estimated using 'time averages' (with data differenced over long periods) and pooled mean group panel methods. The robust result is that the elasticity is in the region of 0.4. This is consistent with previous results obtained using aggregate UK data, and is also in line with some recent results using US firm-level data. Estimated returns to scale exceed unity. When constant returns are imposed, the estimated elasticity of substitution is not substantially changed.
Number of Pages in PDF File: 51 Keywords: Investment, firm-level data, elasticity of substitution, panel JEL Classification: E20, E22 working papers seriesDate posted: October 11, 2008Suggested CitationContact Information
|
|
|||||||||||||||||||||||||||||||||
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
FAQ
Terms of Use
Privacy Policy
Copyright
This page was processed by apollo7 in 0.328 seconds
