Production Functions: The Search for Identification

41 Pages Posted: 13 Jul 2000 Last revised: 25 Mar 2010

See all articles by Zvi Griliches

Zvi Griliches

(Deceased)

Jacques Mairesse

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT); National Bureau of Economic Research (NBER)

Date Written: March 1995

Abstract

Some aspects of the econometric estimation of production functions are discussed, focussing primarily on the issue of simultaneity and reviewing the stream of criticisms of Douglas' work and the response to it. We look in particular at the work that uses panel data on micro data for plants or firms and at some more recent multi-equation extensions of it. We find that researchers, in trying to evade the simultaneity problem, have shifted to the use of thinner and thinner slices of data, exacerbating thereby other problems and misspecifications. We describe the need for better data, especially on product prices at the individual observation level and on relevant cost and demand shifters, and for better behavioral theories which would encompass the large amount of heterogeneity observed at the micro level.

Suggested Citation

Griliches, Zvi and Mairesse, Jacques, Production Functions: The Search for Identification (March 1995). NBER Working Paper No. w5067. Available at SSRN: https://ssrn.com/abstract=225845

Zvi Griliches

(Deceased)

Jacques Mairesse (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Maastricht University - United Nations and Maastricht Economic Research Institute on Innovation and Technology (UNU-MERIT)

Keizer Karelplein 19
6211 TC Maastricht
Netherlands

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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