Slide Kinh tế lượng: Lecture 6 - Extended forms of estimations
COBB-DOUGLAS FUNCTIONS
- Production function: Y = aKαLβ
=> lnY = a1+αln(K)+ βln(L)
=> lnY = a1+αln(K)+ βln(L) + u
- Example:
- Interpretation:
–α: when K increases by 1%, L unchanged then Y increases by α%; the elasticity
–β: when L increases by 1%, K unchanged then Y increases by α%
–a1: when K=L =1=> Y=exp(a1)