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On Exact Multicollinearity and the Estimation of the Cobb‐Douglas Production Function
Author(s) -
Doll John P.
Publication year - 1974
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1238608
Subject(s) - multicollinearity , estimation , econometrics , production (economics) , cobb , cobb–douglas production function , function (biology) , production function , mathematics , statistics , economics , regression analysis , microeconomics , management , evolutionary biology , biology , genetics
The assumptions of the economic model underlying the traditional Cobb‐Douglas production function analysis imply that exact multicollinearity should exist among the inputs. Restricted estimation procedures may lead to parameter estimates with additional economic content. Conventional methods of input aggregation and model specification may result in biased or misinterpreted estimates.