Template-Type: ReDIF-Paper 1.0
Author-Name:  Arne Henningsen
Author-Name-First: Arne
Author-Name-Last: Henningsen
Author-Email: arne@foi.dk
Author-Workplace-Name: Institute of Food and Resource Economics, University of Copenhagen
Author-Name:  Géraldine Henningsen
Author-Name-First: Géraldine
Author-Name-Last: Henningsen
Author-Email: geraldine.henningsen@gmail.com
Author-Workplace-Name: Risř National Laboratory for Sustainable Energy, Technical University of Denmark
Title:  Econometric Estimation of the “Constant Elasticity of Substitution" Function in R: Package micEconCES
Abstract:  The Constant Elasticity of Substitution (CES) function is popular in several areas of economics, but it is rarely used in econometric analysis because it cannot be estimated by standard linear regression techniques. We discuss several existing approaches and propose a new grid-search approach for estimating the traditional CES function with two inputs as well as nested CES functions with three and four inputs. Furthermore, we demonstrate how these approaches can be applied in R using the add-on package micEconCES and we describe how the various estimation approaches are implemented in the micEconCES package. Finally, we illustrate the usage of this package by replicating some estimations of CES functions that are reported in the literature.
Length:  107 pages
Creation-Date:  2011-06
File-URL: http://okonomi.foi.dk/workingpapers/WPpdf/WP2011/WP_2011_9_econometric_estimation_CES.pdf
File-Format: Application/pdf
Number: 2011/9
Classification-JEL: C01, C13, C18, D22, D24, E23, O47
Keywords: constant elasticity of substitution, CES, nested CES, R
Handle: RePEc:foi:wpaper:2011_9