The Review of Economics and Statistics Vol. 55 No. 3 1973
Production Functions with Variable Elasticity of Substitution: A Comment
Abstract
In a recent article of this REVIEW, Sato and Hoffman (1968) derive an explicit form of production function with variable elasticity of factor substitution (hereafter VES production function) and give some estimates of VES functions for United States and Japan. The authors contend that the overall impression (of regression results.) is that VES functions are more realistic than CES (C-D) (Sato and Hoffman: p. 457). The purpose of this note is to show that their results both for United States and Japan, which they report to be most useful ones among other estimates under alternative forms of VES functions, are not valid, primarily because their estimates are not logically consistent with their a priori estimates used for estimating VES functions.
- DOI
- 10.2307/1927966
- Volume
- 55
- Issue
- 3
- Pages
- 394
- Sources
- openalex crossref