Making the Cobb-Douglas Functional Form an Efficient Nonparametric Estimator Through Localization

Federal Reserve Working Paper No. 94-31

Posted: 3 Sep 1999 Last revised: 14 Oct 2008

See all articles by Douglas A. McManus

Douglas A. McManus

Federal Home Loan Mortgage Corporation (FHLMC)

Date Written: September 1994

Abstract

This paper offers a new method for nonparametric estimation - based on the Cobb-Douglas form - that is simple, easy to interpret, efficient among the class of all linear nonparametric estimators, and nearly efficient among all nonparametric estimators. Thus empirical analysts who prefer the tractability of the Cobb-Douglas form may return to using a localized version of it with confidence that it is an efficient nonparametric estimator. This technique is applied to Nerlove's (1964) classic data set to estimate a cost function for U.S. electric utilities.

JEL Classification: C1

Suggested Citation

McManus, Douglas A., Making the Cobb-Douglas Functional Form an Efficient Nonparametric Estimator Through Localization (September 1994). Federal Reserve Working Paper No. 94-31, Available at SSRN: https://ssrn.com/abstract=6058

Douglas A. McManus (Contact Author)

Federal Home Loan Mortgage Corporation (FHLMC) ( email )

8200 Jones Branch Road
McLean, VA 22101
United States
703-903-2953 (Phone)

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