کد مقاله کد نشریه سال انتشار مقاله انگلیسی نسخه تمام متن
5098891 1376967 2012 19 صفحه PDF دانلود رایگان
عنوان انگلیسی مقاله ISI
Getting normalization right: Dealing with 'dimensional constants' in macroeconomics
موضوعات مرتبط
مهندسی و علوم پایه ریاضیات کنترل و بهینه سازی
پیش نمایش صفحه اول مقاله
Getting normalization right: Dealing with 'dimensional constants' in macroeconomics
چکیده انگلیسی
We contribute to a recent literature on the normalization, calibration and estimation of CES production functions. The problem arises because CES 'share' parameters are not in fact shares, but depend on underlying dimensions-in other words they are 'dimensional constants'. It follows that such parameters can neither be calibrated nor be estimated unless the choice of units is made explicit. We use an RBC model to demonstrate two equivalent solutions. The standard one expresses the production function in deviation form about some reference point, usually the steady state of the model. Our alternative, 're-parameterization', expresses dimensional constants in terms of a new dimensionless (share) parameter and all remaining dimensionless ones. We show that our 're-parameterization' method is equivalent and arguably more straightforward than the standard normalization in deviation form. We then examine a similar problem of dimensional constants for CES utility functions in a two-sector model and in a small open economy model; then re-parameterization is the only solution to the problem, showing that our approach is in fact more general.
ناشر
Database: Elsevier - ScienceDirect (ساینس دایرکت)
Journal: Journal of Economic Dynamics and Control - Volume 36, Issue 12, December 2012, Pages 1931-1949
نویسندگان
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