The Treatment of Non-essential Inputs in a Cobb-Douglas Technology An Application to Mexican Rural Household Level Data

@inproceedings{Soloaga2000TheTO,
  title={The Treatment of Non-essential Inputs in a Cobb-Douglas Technology An Application to Mexican Rural Household Level Data},
  author={Isidro Soloaga},
  year={2000}
}
  • Isidro Soloaga
  • Published 2000
The standard approach for fitting a Cobb-Douglas production function to micro-data with zero values is to transform zero-values to facilitate the logarithmic transformation. In general the estimates obtained are extremely sensitive to the transformation chosen, generating doubts about the use of a specification that assumes all inputs are essential (as the Cobb-Douglas does) when that is not the case. An alternative method is presented in the paper which allows to actually estimate the degree… CONTINUE READING

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