Multifactor CES general equilibrium: Models and applications

Jiyoung Kim, Satoshi Nakano, Kazuhiko Nishimura

Research output: Contribution to journalArticle

Abstract

Sector-specific multifactor CES elasticities of substitution and the corresponding productivity growth are jointly measured by regressing the growth of per-factor cost shares against the growth of factor prices. We use linked input-output tables for Japan and the Republic of Korea as the data source for factor price and cost shares in two temporally distant states. We then construct a multisectoral general equilibrium model using the system of estimated CES unit cost functions and evaluate the economy-wide propagation of an exogenous productivity stimulus in terms of welfare. Further, we examine the differences between models based on a priori elasticities such as Leontief and Cobb-Douglas.

Original languageEnglish
Pages (from-to)115-127
Number of pages13
JournalEconomic Modelling
Volume63
DOIs
Publication statusPublished - Jun 1 2017
Externally publishedYes

Keywords

  • Elasticity of substitution
  • General equilibrium
  • Linked input-output tables
  • Multifactor CES
  • Productivity growth

ASJC Scopus subject areas

  • Economics and Econometrics

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