Estimation of Resource-Specific Technological Change in a Production Function

Technological Forecasting and Social Change. DOI: 10.1016/j.techfore.2018.08.006

13 Pages Posted: 25 Jun 2016 Last revised: 16 Aug 2018

See all articles by Taoyuan Wei

Taoyuan Wei

Center for International Climate and Environmental Research (CICERO)

Yang Liu

International Energy Agency

Date Written: May 9, 2016

Abstract

Technological change plays a critical role in economic growth. Prevailing approaches to estimation of total technological change are associated with total factor productivity (TFP) based on a Cobb-Douglas (CD) production function. To estimate resource-specific technological change, previous studies typically assume an alternative specific functional form other than a CD function such as a transcendental logarithmic (translog) or a Constant Elasticity of Substitution (CES) function. In this article, we argue that under certain conditions, a resource-specific technological change can be estimated from observed resource intensity/productivity data over time, irrespective of which functional form is adopted. We also illustrate that if the estimated technological change is applied to a CD production function, the estimated resource elasticities can differ considerably from that estimated by the prevailing TFP approach. In our case of a panel data for 40 regions 1995-2009, our approach shows that a CD function is plausible across regions compared to the TFP approach.

Keywords: Resource intensity; Resource productivity; Cobb-Douglas; Translog; CES; resource elasticity; economic growth

Suggested Citation

Wei, Taoyuan and Liu, Yang, Estimation of Resource-Specific Technological Change in a Production Function (May 9, 2016). Technological Forecasting and Social Change. DOI: 10.1016/j.techfore.2018.08.006, Available at SSRN: https://ssrn.com/abstract=2800150 or http://dx.doi.org/10.2139/ssrn.2800150

Taoyuan Wei (Contact Author)

Center for International Climate and Environmental Research (CICERO) ( email )

P.O. Box 1129 Blindern
Oslo, 0317
Norway

Yang Liu

International Energy Agency ( email )

9, rue de la Federation
75739 Paris, Cedex 15
France

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