Output Elasticity Research Articles

Comparative Analysis of Monetary Policy Rules Using Bayesian Estimation of Macroeconomic Models

Monetary policy aimed at controlling economies focuses on manipulating interest rates in an effort to manage the output, inflation price level, and activity. Our study analyzes the effects of monetary policy from 1980 to 2023 using Bayesian estimation methods across four macroeconomic models: a calibrated New-Keynesian model, Federal Reserve’s FRB model, a New Keynesian DSGE model and Smets and Wouters model. Simulation concentrates on three policy rules such as Taylor, LWW and SW, and how they affect significant variables such as real GDP, inflation and investment. Differences in the response patterns to monetary policy changes are captured by all models; however, the degree of output elasticity and the time taken by it to respond differently to a cut in interest rates is observed to be different. New-Keynesian model demonstrates a sudden and temporary rise in output, the FRB and DSGE models reveal prolonged but slow changes and the adjustment takes longer, according to the FRB model. Inflation responses that are pro-cyclical are also persistent across models and affected by the price stickiness effect. Models with financial accelerators such as the DSGE provide better insights of the relations between interest rates and borrowing costs. Lastly, sensitivity analysis also reveals that model structure and policy rule decision significantly affect the results, consistent with the notion that monetary policy should be well suited to economic environment.

The Role of Agricultural Socialized Services in Mitigating Rural Labor Shortages: A Multi-Crop Analysis of Production Performance

China’s agricultural sector faces unprecedented challenges due to rapid urbanization. The rural labor force is declining, and the agricultural workforce is aging significantly. This labor shortage, worsened by the exodus of agricultural technicians, threatens food security and agricultural sustainability. This study analyzes data from 30 Chinese provinces from 2011 to 2022 using a transcendental logarithmic production function. The research examines how agricultural socialized services can alleviate rural labor shortages by improving production efficiency. It also investigates these services’ impact on labor input intensity and grain yield across different crops and regions. The results show that socialized agricultural services effectively promote food production. At the national level, these services can promote a 54.4% increase in total crop production. Agricultural socialized services are gradually developing toward labor substitution. The significant negative interaction coefficient between services and labor confirms this substitution effect. The input–output elasticity of these services is positive for total crop and cereal crop production in major production areas. It also shows positive elasticity for total crop and tuber crop production in non-major production areas. The national-level “service-labor” technical elasticity of substitution maintains values above zero, averaging 0.37 across regions, offering an effective solution to agricultural labor shortages. This study identifies a threshold effect where these services’ impact on food production significantly increases with business scale expansion. These findings highlight the importance of optimizing agricultural socialized services through strengthened service systems, differentiated regional strategies, technological innovation, and comprehensive support policies. Such targeted approaches would enhance substitution effects and service efficiency, addressing labor shortages and boosting food production.

Design and Optimisation of Piezoelectric Materials for Harnessing Ambient Mechanical Energy

The ability of some materials to undergo deformation in response to the application of an electric field and, conversely, to generate an electric charge when exposed to mechanical forces is referred to as piezoelectricity. The bidirectional interaction between mechanical and electrical energy renders piezoelectric materials very adaptable for many applications, including sensors, actuators, and energy harvesting. This study focuses on the design and optimization of nano-structured piezoelectric cylindrical rods for harvesting ambient mechanical energy. Using finite element modeling in COMSOL Multiphysics, the research investigates the behavior of various piezoelectric substance, under varying conditions. The performance was analyzed based on eigenfrequencies, deflection patterns, and voltage output across different lengths of the cylindrical rod. Results demonstrated that material selection and structural configuration critically influence the energy harvesting efficiency. Barium Titanate exhibited high voltage output but limited elasticity, while PVDF showed promising flexibility and environmental resilience. The findings support the potential of piezoelectric energy harvesters for powering wireless electronic devices by capturing mechanical vibrations from ambient environments.

A theoretical analysis of the elasticity of per capita income in relation to population density

ABSTRACT We consider a spatial economy where an undifferentiated consumer good is produced by competitive agents along two successive growth regimes. Under the first growth regime (called ‘traditional’ or ‘classical’), each agent self-produces the required (human) capital good and the elasticity of output per worker relative to employment density is negative. If population increases sufficiently, then final producers switch to outsourcing the (human) capital good to spatial monopolies and then to monopolistically competitive firms. With a capital good industry operating under increasing returns to scale, the per capita income elasticity relative to density might become positive if the role of land as a factor of final goods production is diminished and technological externalities are effectively used.

Supply response of maize in Zambia

The objective of this study is to analyze the supply response of maize in Zambia. The study uses the elasticities of supply to explain how farmers respond to both endogenous and exogenous factors. In this research paper, the method adopted is the Error correction model of the univariate to analyze the response of farmers. The Error correction model estimate both the short run and long run elasticities of agricultural output. However, the model uses maize (Yt) as the dependent variable measured per annual metric tons, maize own price (Pm) as the independent variable measured per metric tons, price of close substitute crop (Psb) measured per metric tons, price of fertilizer (Ft) measured per metric tons and average annual rainfall amount (Rt) to determine how a farmer will respond when these factors change both in the short run and long run. The analysis will be done by using E-views statistical software and the data used will be macroeconomic time series -secondary data for the period of forty (40) years from 1980 to 2020.

Productivity, real wages, and gender. A study in Colombian manufacturing

Background Orthodox microeconomic theory establishes a positive link between employee wages and productivity in competitive markets. However, this perspective often overlooks gender and treats the workforce as a homogeneous category labelled as labor, potentially obscuring issues of gender discrimination. This article addresses the gender wage gap by analyzing, for the first time, at least in an emerging economy such as Colombia, the impact of manufacturing firm’s productivity on wages explicitly including gender. Method First, we use the GMM two-equation system proposed by Wooldridge (2009) to obtain consistent and unbiased estimates of output elasticities and TFP, respectively. Secondly, we explore wages-productivity linkage by gender, implementing a dynamic random effect generalized least squares model (GLS) with panel data to deal with endogeneity issues. Results Our main findings reveal, among others, that firms with a higher proportion of female workers (female firms) generally have higher productivity than those with a higher proportion of male workers (male firms). Conclusions The effect of female firm’s productivity on wages is lower than that of male firm’s productivity, which could indicate gender wage discrimination

Induced Innovation, Inventors, and the Energy Transition

We study how individual inventors respond to incentives to work on “clean” electricity technologies. Using natural gas price variation, we estimate output and entry elasticities of inventors and measure the medium-term impacts of a price increase mirroring the social cost of carbon. We find that the induced clean innovation response primarily comes from existing clean inventors. New inventors are less responsive on the margin than their average contribution to clean energy patenting would indicate. Our results strengthen the rationale for government intervention to expedite the energy transition. (JEL L94, O31, O34, Q35, Q42, Q55)

Organizational experience and cost-cutting agreements in the Formula One industry: a dynamic capabilities approach

ABSTRACT Research Questions: The Dynamic Capabilities theory posits organizational experience as a key source of sustained competitive advantage. However, empirical evidence remains limited in predictable environments, particularly when distinguishing between continuous and discontinuous changes. This study is the first to address this gap by examining the Formula 1 industry under resource constraints. Research Methods: We used a dataset of 4,479 observations, including economic and performance data from the 2009–2019 Formula 1 seasons. Through a multilevel model, we estimated the output elasticities of driver, car, and team experience, and evaluated their relationship with the Resource Restriction Agreement (RRA), implemented between 2010 and 2013. Results and Findings: We found that team experience contributed 18% to sporting success, but turned negative during the RRA, indicating it functions as a dynamic capability under continuous, predictable changes, but is less effective with discontinuous changes. Despite the RRA disadvantaged older teams, the Gini coefficient remained stable, likely due to the uneven distribution of driver talent across teams. Implications: Cost reduction agreements can promote competitive balance but require complementary strategies. Recommendations include ensuring team survival, prioritizing team acquisition over creating new ones, addressing driver skill disparities, and designing flexible and enforceable cost-cutting agreements.

Konsep Elastisitas Penawaran dalam Perspektif Ekonomi Islam

This study explores the concept of supply elasticity, a critical aspect of economics that measures the responsiveness of the quantity supplied to changes in price and other influencing factors. Supply elasticity is classified into several types: elastic, inelastic, unitary, perfectly elastic, and perfectly inelastic. Factors influencing supply elasticity include time, product durability, production factor mobility, ease of market entry for new producers, and inventory levels. This study employs a descriptive-analytical method, referencing various literature sources and case studies related to supply elasticity across different economic sectors. The findings indicate that understanding supply elasticity is crucial for formulating sales strategies, government policies, and comprehending market dynamics. Case studies discussed include the supply elasticity of coffee in Banda Aceh and the supply elasticity of output and input demand in shallot farming in Demak Regency. This research underscores the importance of grasping supply elasticity for effective decision-making in economics.

The productivity effects of worker representation on the board

ABSTRACT Using an unusually long panel data set of firms for three separate industries we find: (i) in printing, worker representation on boards has a small and positive effect on firm productivity, whereas there is no effect in other industries; (ii) by itself, profit sharing with employees enhances organisational productivity, about 3.6% in clothing, 7% in printing and 9% in footwear; (iii) the productivity effect of worker representation on the board is seldom enhanced by profit sharing – evidence on complementarities is very weak. In additional exercises, we allow decision-making participation (and profit sharing) not only to directly affect output but to also affect the output elasticities of labour and capital, and, to account for the possible endogeneity of labour and the capital stock, we estimate using instrumental variables. These results essentially confirm previous findings. In addition: (iv) the productivity effect of worker directors varies considerably across industries according to size and capital intensity.

The Contribution of Total Factor Productivity on Economic Growth in Selected Southeastern European Countries

This paper delves into the impact of capital accumulation, effective employment, and total factor productivity (TFP) on the economic growth of five Southeastern European countries: Albania, Croatia, North Macedonia, Serbia, and Slovenia. The examination is based on the Solow-Swan neoclassical growth model and the Cobb-Douglas production function, which dissects economic growth into capital, labour, and productivity inputs. The analysis pays particular attention to the growth dynamics of North Macedonia over the entire period (1998-2019) and two sub-periods (1998-2008 and 2009-2019). The article seeks to provide a comprehensive evaluation of the primary drivers of economic growth in Southeastern European countries, emphasising the evolving roles of capital, labour, and productivity over time. Through a detailed analysis of these determinants, the study offers insights into the necessary policy actions to ensure sustainable long-term growth, especially in transition economies. The empirical analysis utilises the growth accounting framework and employs regression analysis to estimate the output elasticities of capital and labour inputs. The data analysis covers the period of 1998-2019, specifically focusing on two sub-periods to investigate shifts in growth drivers over time. Each factor's contributions are presented in absolute terms (percentage points) and relative terms (percentages) to provide a comprehensive understanding of their roles. The findings indicate that capital accumulation has been the predominant growth driver in most countries, especially Albania, Croatia, and North Macedonia. However, in Serbia and Slovenia, total factor productivity (TFP) played a more significant role, contributing substantially to growth. In North Macedonia, TFP showed strong contributions during 1998-2008 but declined sharply in 2009-2019, leading to increasing reliance on capital and labour inputs for growth. This study is valuable in emphasising the shift in growth drivers over time and highlighting the importance for Southeastern European countries to concentrate on productivity enhancements, innovation, and labour market reforms to sustain long-term growth. These findings provide significant insights for policymakers seeking to improve economic performance in transition economies.

Synergistic development path of conventional and unconventional water in China: From the perspectives of output and substitution elasticities

Synergistic development path of conventional and unconventional water in China: From the perspectives of output and substitution elasticities

Regional Economic Development, Climate Change, and Work Force in a Gender Perspective in Chile: Insights from the Input–Output Matrix

Most nations fulfilled the commitment to reduce their emissions after the Paris Climate Agreement, and as a result, each nation has produced suitable plans to reach those goals. In this sense, Chile is hardly an exception. The emission multiplier product matrix (eMPM) and labor multiplier product matrix (lMPM), which are associated with the gender differences in the labor market, a state-of-the-art technique that integrates CO2 emissions with multi-region input–output table (MRIO) databases and elasticity to estimate the pollution caused by inter-industrial activity in the nation’s various north, center, and south regions, are used in this article to analyze the emissions of Chilean industries. This approach, by studying the economic territorial consistency (ETC) issue, is expected to establish a connection between each region’s production structure and interregional relationships between gender and the main industries that produce emissions. Indeed, the study aims to determine which regions foster economic development from an equitable perspective through the ETC study. The ETC in Chile depends on some variables, such as labor force, gender and CO2 emissions. The improvement in terms ofion will depend on the use of technology and the proper state regulation in line with the promises gained by Chile following the convening of COP25.

The Elasticity of Aggregate Output with Respect to Capital and Labor

It is often assumed that the elasticity of GDP with respect to capital is one-third, but this assumes zero markups and an aggregate production function. I estimate the elasticity allowing markups to vary by industry and with a rich input-output structure. Assumptions about capital costs provide bounds on elasticity. In the United States from 1948–1995, the capital elasticity ranged from 0.19–0.32 and shifted to 0. 24–0.37 by 1996–2018. Excluding housing or decapitalizing intellectual property lowers bounds to as low as 0. 11–0.26. Based on these elasticities, common estimates of total factor productivity growth represent a lower bound. (JEL E13, E22, E23, E25, N12)

Endogenous technologies and productivity in rice production: Roles of social instability in Myanmar since 2021

Abstract Despite technologies' critical roles in agricultural productivity, evidence is scarce on how conflict affects technology adoption and consequent agricultural productivity, often due to a lack of data in fragile states. Our study contributes to filling this knowledge gap by using unique large‐scale data on rice producers before and after a military coup in Myanmar in 2021 that led to a significant increase in conflicts in the country. We find that the increase in violent events including those in adjacent townships significantly changed the rice production function in both factor‐neutral and non‐neutral ways. Specifically, increased violent events have been generally associated with downward factor‐neutral shift in production function, and more importantly, increased output elasticity to agricultural capital (equipment) owned (in other words, reduced output resilience against capital ownership shocks). Our evidence also suggests that this has been led partly through reduced access to agricultural extension services, which would otherwise help farmers maintain productivity even with limited capital ownership by substituting it with human capital and skills. Our results consistently hold for both panel and cross‐sectional production functions across various specifications and particularly in Lower Myanmar. Results also indicate that lower mechanization service fees partly mitigate these effects.

AI-driven capital-skill complementarity: Implications for skill premiums and labor mobility

AI-driven capital-skill complementarity: Implications for skill premiums and labor mobility

R&D investment: A dynamic efficiency approach in the EU countries

This paper aims to analyze the role of research and development (R&D) in the production efficiency of European Union Member States. Utilizing Bayesian methods within a dynamic framework, the study jointly estimates production functions and efficiency for a sample of 27 countries over the 2000–2021 period. The findings reveal that human capital investment exhibits a higher output elasticity compared to physical capital investment. Additionally, the results indicate that inefficiencies persist due to escalating costs—both monetary and temporal—as inputs expand. Across the studied countries, an upward trend in R&D expenditure is associated with increasing technical efficiency levels, establishing a positive relationship between R&D spending and technical efficiency scores. Geographically, eastern and southern European regions exhibit lower average efficiency levels. These insights are crucial for policymakers seeking to foster innovation-driven policies, highlighting the importance of maintaining or increasing R&D spending to achieve the economic and social objectives of the European Union. Through appropriate R&D policies, policymakers can enhance technical efficiency, ensure the EU's global competitiveness, and promote more equitable development across the Union.

Evaluating the Effects of Public Debt on Sri Lanka’s Economic Growth: A Short-term and Long-term Perspective

Aims: The objective of this paper is to examine whether public debt enhances economic growth in Sri Lanka by separating debt into domestic and external debt. Study Design: The paper adopts the Keynesian demand-side model to estimate GDP on demand-side and supply-side factors such as domestic debt, external debt, gross fixed capital formation (investment in short), labour force, general price level, money supply, government spending and trade openness. In a model where debt causes investment, public debt effects are netted out from investment by removing the estimated investment effects of domestic and external debt. Duration of Study: quarterly data from Q1 2010 to Q1 2023 are utilized to trace the long-term and the short-term effects of domestic and external debt on GDP. Methodology: The ARDL method of estimation is used and the model is estimated in double log form so that estimated parameters reflect output elasticities. A general to specific modelling approach is adopted to find the best suited model. Results: Variables such as government spending, money supply, general price level and labour force are not relevant while domestic debt, external debt, investment (debt effects netted out) and trade openness are significant in describing GDP. The long-term domestic debt elasticity of GDP is 0.588 while short-term domestic debt elasticity (sum of contemporaneous and lag effects) is about 0.63. The cumulative effects of domestic debt on GDP tappers off to 0.60 in the long-run. The result suggests negative impacts (-0.272 and -0.254) of external debt on the economic growth in short-term and long-term respectively. The negative effect of external debt can be justified if recent external borrowings have been used to repay loans taken to finance war and unproductive projects. Conclusion: The paper finds that the domestic public debt creates relatively strong positive effects on GDP in the short-term and the long-term. Contrary to the expectations, the effects of external debt on GDP have become negative both in the short-term and the long-term. The paper also finds that debt effects on GDP have been significantly reduced when debt effect-ridden investment variable is included in the regression in place of debt-effect netted out investment. Thus, this study recommends researchers to carry out further research on why the effects of external debt on GDP become negative. Further, it recommends policy makers to use both domestic and external debt to finance public investment and productivity enhancement projects rather than borrowing merely for the purpose of consumption and repaying of existing debt.

Structural Changes in Chile’s Industries to Reduce Carbon Dioxide (CO2) Emissions: An Emissions Multiplier Product Matrix Analysis (eMPM)

Most countries in the world have agreed to reduce their emissions following the COP21 agreement in Paris, and as a result, each nation has presented suitable plans to do so. Chile is not an exception in this regard. This article examines the emissions of Chilean industries using the emission multiplier product matrix (eMPM), a cutting-edge method that estimates the pollution caused by inter-industrial activity in the country’s regions by integrating CO2 emissions with multi-region input–output table (MRIO) databases and elasticities. This approach connects the major emissions-producing sectors to the regions where these emissions come from, thereby accounting for existing interregional linkages. The application of technology, along with adequate state regulation in compliance with Chile’s pledges, acquired following the COP25 call, will decide the level of improvement in emissions reduction.

Inflation targeting, output stabilization, and real indeterminacy in monetary models with an interest rate rule

Abstract Central banks set the nominal interest rate to target inflation and stabilize output. In monetary models, monetary policy affects output directly via the wealth effect. I show that in these models, the response of the central bank to fluctuations in output may induce real indeterminacy even if the Taylor principle is satisfied. I find that the determinacy conditions depend on the interest elasticity of output and generally, the Taylor principle is neither necessary nor sufficient for determinacy. This is in stark contrast with the New Keynesian model where a sufficiently strong policy response to inflation or output usually ensures determinacy.