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| Denis Stijepic |
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| ''An argument against Cobb-Douglas production functions (in multi-sector growth modeling)'' |
| ( 2017, Vol. 37 No.2 ) |
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| Recent growth literature deals with long run cross-sector labor allocation dynamics in multi-sector growth models. We analyze what the adequate assumptions regarding the sectoral production functions in this type of (very long run) model are. By employing an axiomatic/geometrical approach, we demonstrate that the basic stylized facts of long run sector and aggregate dynamics and the standard theory axioms are not consistent with the assumption of Cobb-Douglas production functions at the sector level. This result can be regarded as an empirical rejection of the Cobb-Douglas production function (at the sector level) on the basis of very long run, qualitative data. |
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| Keywords: Cobb-Douglas, production function, labor income share, sectors, long run, structural transformation, geometric, axiomatic |
JEL: O4 - Economic Growth and Aggregate Productivity: General
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| Manuscript Received : Feb 06 2017 | | Manuscript Accepted : May 25 2017 |
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