Knowledge that Transforms

Michael D. McCarthy, Embodied and Disembodied Technical Progress in the Constant Elasticity of Substitution Production Function, The Review of Economics and Statistics, Vol. 47, No. 1 (Feb., 1965), pp. 71-75

D ISEMBODIED technical progress, output increases realized by reorganization of industry, etc., (rather than increases in factor inputs) and embodied technical progress, output increases realized by improved quality of factor inputs (both labor and capital) are estimated below for the United States, 1929 to 1958, by fitting a total output production function. Disembodied technical progress is measured by shifts in the production function; embodied technical progress is measured by weighting capital and labor input indices for quality changes (i.e., using effective factor inputs). These results represent a synthesis and extension of previous papers by R. M. Solow.'

Frank T. Denton, John Kuiper, The Effect of Measurement Errors on Parameter Estimates and Forecasts: A Case Study Based on the Canadian Preliminary National Accounts, The Review of Economics and Statistics, Vol. 47, No. 2 (May, 1965), pp. 198-206

IN a recent pioneering paper Arrow, Chenery, Minhas, and Solow,' hereafter referred to as Arrow, et al., have proposed a new class of production functions of great flexibility. Essentially, they address themselves to the following problem: If it is given that a certain relationship exists between wages and output per man-hour, then what sort of production function rationalizes this relationship. Specifically if it is given that

PURSUING the methods by which Leontief discovered his renowned paradox, previous empirical studies of the relationship among factors, production, and trade have computed the content of a single country's trade from the factor requirements of its production processes.' The present study introduces a somewhat different method. The assumption is made that all manufactured goods traded, not only by the United States but by other countries as well, are produced with a single set of technical coefficients, namely the combinations of labor skills observed in each industry in the United States. It is postulated that the availability of labor skills determines patterns of international location and trade for a broad group of manufactured products, those not closely tied to natural resources. It is further supposed that the relationship between trade and skills for these goods will reveal itself in American skill requirements for reproducing trade flows. The first expectation seems plausible. Direct capital requirements are not as high in manufacturing as in most other activities.2 Labor appears to be less mobile internationally than liquid capital or capital goods. Generations of industrial experience and education may be required to build a skilled labor force. Let me spell out the basic method before examining its rationale. As in Leontief's computations, production functions are assumed to involve simple linear combinations of factors. There are no scale effects, and factors are perfectly divisible. We define Si as a quantity of the ith factor, such as labor of a specified skill class; Xj is the quantity of the jth product traded, so that XI, X2, X3, . . . , Xm describes the composition of a trade flow such as Japanese exports.3 To determine the skills required to produce this trade flow with American coefficients, we multiply our m-item trade vector X by an m X n matrix A, in which the elements aij (i= 1, 2, . . . n; j=1, 2,... m) represent average United States direct requirements for labor of n skill classes to produce a unit of output of each product. The result, the vector SI, S2, S3, . . . , SX, shows United States skill requirements for producing the goods in the trade flow.

AN UMBER of recent studies demonstrating the predictive effectiveness of consumer attitudes in aggregative time series 1 have revived interest in consumer anticipations data. Yet, the conflict of these results with the conclusions of previous cross-section tests has not been resolved and the source of the predictive effect observed in time series still requires investigation. The purpose of this paper is to see whether the macro time-series relationships observed between consumer attitudes and purchasing have parallels at the micro-economic level.