A Ces Indirect Production Function

11 Pages Posted: 4 Jul 2000 Last revised: 9 Jul 2010

See all articles by Boyan Jovanovic

Boyan Jovanovic

New York University - Department of Economics

Date Written: October 1995

Abstract

This paper derives an indirect production function that is, in a special case, of a constant elasticity of substitution form. This is not a contribution to the theory of aggregation generally. Instead it is a microfoundation for a specific but popular production function -- the CES -- that helps us express the important concept of the elasticity of substitution in terms of more primitive, and more intuitive concepts of the returns to scale. The paper presents a simple lemma, and then shows that several and diverse applications have a common logical structure: the production function often used in growth theory, the utility function when there is household production, human capital theory, and the concept of the aggregate technology shock.

Suggested Citation

Jovanovic, Boyan, A Ces Indirect Production Function (October 1995). NBER Working Paper No. t0188, Available at SSRN: https://ssrn.com/abstract=225097

Boyan Jovanovic (Contact Author)

New York University - Department of Economics ( email )

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