Abstract
We examined three cases of Schully model [1] [2] for Mongolian economy. In the first case, we consider the production function with constant returns to scale. In the second case, we employ an econometric model for the production function with none constant return to scale without constraints on parameters of elasticities. Finally, the constrained regression model has been implemented by solving a convex minimization problem over a convex set. Also, we have proved that Schully production function namely, “U shape function” in the literature [1] [2] [3] in fact is concave function under some assumptions.
Highlights
Economic growth is the main macroeconomic indicator
We examined three cases of Schully model [1] [2] for Mongolian economy
We employ an econometric model for the production function with none constant return to scale without constraints on parameters of elasticities
Summary
Economic growth is the main macroeconomic indicator. There are many works [1]-[8] devoted to economic growth. In papers [1] [9] [10] [11] economic growth and taxation have been studied. Growth can be reached by the accumulation of capital and from innovations which lead to technical progress. Accumulation and innovation increase the productivity of inputs into production and provides the potential level of output. The rate of growth can be affected by policy choices through the taxation. Lower returns mean less accumulation and innovation, and a lower rate of growth. This is the negative aspect of taxation. Taxation provides the means to finance these expenditures
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