Journal of the American Statistical Association volume 84, issue 405, P76-87 1989 DOI: 10.1080/01621459.1989.10478740 View full text
Dean Mountain, Cheng Hsiao

Abstract: In theory, a flexible functional form can approximate an arbitrary elasticity of substitution; however, when faced with an actual finite data set, a parsimonious parametric functional form that imposes more structural restrictions may yield a more accurate approximation about underlying substitution. Therefore, for uncovering the underlying degree of input substitution a dataexploration strategy is suggested that combines the parametric family of a system of quadratic log-ratio demand equations and convention…

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