Accession Number:

AD0296818

Title:

AGGREGATION AND MULTIPLICATIVE PRODUCTION FUNCTIONS

Descriptive Note:

Corporate Author:

RAND CORP SANTA MONICA CA

Personal Author(s):

Report Date:

1963-02-01

Pagination or Media Count:

11.0

Abstract:

Consider a sector of the economy composed of several fully integrated industries, producing final products only. Write the sectoral production function 1 Q t AtKt Lt1- , where Q output, K capital input, L labor input, t time, and A is a technology parameter. Further, let the production function for industry i be written 2 Qit AitKit i Lit1- i. Now, the percentage rate of technical change -what Domar terms the Residual -- for the sector can be expressed 3 A Q - K - 1- L, A Q K L and similarly for an industry. The problem, then, is to find a method for weighting and aggregating the industry production functions which leaves the rate of technical change invariant with respect to aggregation. Professor Domars solution is to raise both sides of 2 to the vi power, where vi Qi and to multiply Q , industry production functions together to obtain the sector function.

Subject Categories:

  • Psychology

Distribution Statement:

APPROVED FOR PUBLIC RELEASE