Output Elasticity Research Articles

Measuring the impact of surface ozone on rice production in China: a normalized profit function approach

PurposeThe purpose of this study is to investigate the impacts of surface ozone pollution on rice profit, output and variable inputs in China.Design/methodology/approachThis study estimates the rice profit function using county-level rice production data and ozone monitoring data in 2014 and 2015 to capture the impact of ozone pollution on rice profit. Then, it uses dual approach to identify the impacts of ozone on the supply of rice and the demand for variable inputs. The ozone concentration data are obtained from 1,412 monitoring stations established by the National Environmental Monitoring Centre of China.FindingsThe results show that surface ozone would significantly reduce rice profits; a 1% increase in (the daily average ozone concentration from 9 am to 4 pm) leads to a 0.1% decrease in profits. In addition, ozone has a negative impact on the levels of inputs and the supply of rice, and the elasticities of rice output, fertilizer input and labour input with respect to are −0.87, −0.86 and −0.78%, respectively. These results suggest that ozone pollution affects rice production via two channels: the direct damage on rice growth and the indirect negative impact of reducing variable inputs.Originality/valueThis study estimates the impacts of surface ozone pollution on rice profit and output, and quantifies its influence on variable inputs in China, which provides a better understanding of farmers' adaptation behaviour.

Employment to output elasticities and reforms towards flexicurity: Evidence from OECD countries

AbstractLabor market reforms in the direction of “flexicurity” have been widely endorsed as a means to increase an economy's ability to adjust to negative shocks while offering adequate social safety nets. This paper empirically examines how such reforms influence employment's responsiveness to output fluctuations (employment–output elasticity). To address this question, we employ a single equation error correction model with policy interactions on a panel of OECD countries, which also incorporates the period of the Great Recession, and distinguish between passive and active labor market policy types. Flexicurity is represented by three policy measures: unemployment benefit generosity, the flexibility of hiring and firing rules, and spending on active labor market policies. We find that the effects of any single policy change are shaped by the broader existing policy mix within which it takes place. A hypothetical flexicurity reform towards the policy mix of Denmark, a well‐known example of the flexicurity regime, is found to increase or leave unchanged countries' short‐run employment–output elasticities, depending on the initial policy mix. These results are robust to accounting for a large set of additional labor market institutions.

Research on the measurement of contribution value of scientific and technological talents in China’s mining industry——Innovative application based on “Cobb Douglas production function method”

This paper aims to determine the contribution value of scientific and technological talents from Mining to national economic development, with data collecting on the correlations between the national Mining and the national economic development from 2005 to 2019, comprising the added value, the capital formation and the total wages and growth rate of the Mining. Through the Cobb-Douglas production function method, the contribution index of Mining talents was confirmed. Combining this index with high-tech talents, the contribution value of Mining science and technology talents was calculated and determined by using big date and informatization method. The results show that in 2005, the contribution value of scientific and technological talents in China’s mining industry in enterprise scientific and technological research and development was 2288.4 yuan / person year, which increased to 3821.1 yuan / person year in 2018, with an average annual increase of 4.01%, 16 years average 7011.1 yuan / person year. This value is much lower than the contribution of capital, and its output elasticity (index) is only 7.42% of capital. However, this is the result of the scientific and technological talents in the mining industry with the value of selfless dedication. It is the real motivation and purpose of the author to write this paper: appeal to the state, society and enterprises to increase the scientific and technological investment in the mining industry and constantly improve the conditions and treatment of scientific and technological talents in the mining industry.

Monetary Policy and Liquidity Constraints: Evidence from the Euro Area

We quantify the relationship between the response of output to monetary policy shocks and the share of liquidity-constrained households. We do so in the context of the euro area, using a Local Projections Instrumental Variables estimation. We construct an instrument for changes in interest rates from changes in overnight indexed swap rates in a narrow time window around ECB announcements. Monetary policy shocks have heterogeneous effects on output across countries. Using micro data, we show that the elasticity of output to monetary policy shocks is larger in countries that have a larger fraction of households that are liquidity constrained. (JEL E23, E43, E52, F33, F45, G51)

Parameter estimation of the Solow–Swan fundamental differential equation

BackgroundThe Solow–Swan model describes the long-term growth of the capital to labor ratio by the fundamental differential equation of Solow–Swan theory. In conventional approaches, this equation was fitted to data using additional information, such as the rates of population growth, capital depreciation, or saving. However, this was not the best possible fit. ObjectivesUsing the method of least squares, what is the best possible fit of the fundamental equation to the time-series of the capital to labor ratios? Are the best-fit parameters economically sound? MethodFor the data, we used the Penn-World Table in its 2021 version and compared six countries and three definitions of the capital to labor ratio. For optimization, we used a custom-made variant of the method of simulated annealing. We also compared different optimization methods and calibrations. ResultsWhen comparing different methods of optimization, our custom-made tool provided reliable parameter estimates. In terms of R-squared they improved upon the parameter estimates of the conventional approach. Except for the USA, the best-fit values of the exponent were unplausible, as they suggested a too large elasticity of output. However, using a different calibration resulted in more plausible values of the best-fit exponent also for France and Pakistan, but not for Argentina and Japan. ConclusionOur results have shown a discrepancy between the best-fit parameters obtained from optimization and the parameter values that are deemed plausible in economy. We propose a research program to resolve this issue by investigating if suitable calibrations may generate economically plausible best-fit parameter values.

The effects of the limited exhaustibility of knowledge on firm size and the direction of technological change

The new knowledge intensive direction of technological change is magnified at the firm level by the limited exhaustibility of knowledge. This limited exhaustibility triggers cumulability and extensibility for which the larger the firm, the lower the knowledge generation costs from using a larger stock of existing knowledge, and the lower the knowledge exploitation costs related to a larger output based on use of the same piece of knowledge. The consequences for the direction of technological change are twofold. First, the larger the firm size, the larger the share of intangible capital in total capital. Second, the output elasticity of intangible capital increases with the size of the firm. We test our hypotheses on data on US listed companies over the period 1977–2016. The results of ordinary least squares, two-stage least squares and production function estimations confirm our theoretical expectations.

Estimation and Dynamic Evolution of Provincial Factor-Output Elasticity in China

China is currently in a new phase of transition from high-speed growth to high-quality growth, and accurate estimation of element outputs is essential for the smooth progress of the transition. Using the back-fitting method, this study constructed a model of a spatiotemporal-varying elasticity production function to estimate the factor-output elasticity from 1993 to 2017 in 31 Chinese provinces. Nonparametric kernel density method was applied to describe the spatiotemporal evolution characteristics of factor-output elasticity. The results show that the factor-output elasticity of different provinces shows a nonlinear change trend over time and between regions. Overall, the elasticity of labor output shows a decreasing trend, the elasticity of capital output shows an increasing tendency, the eastern region has the lowest level of labor-output elasticity, but the highest level of capital-output elasticity. The western region has the highest level of labor-output elasticity but the lowest level of capital-output elasticity. On the whole, regions with higher resilience in labor output gradually shift towards the West, while capital shifts towards the East.

Measurement and Analysis of Contribution Rate for China Rice Input Factors via a Varying-Coefficient Production Function Model

To explore the internal driving force of the growth of rice yield per unit area in China, a model based on varying-coefficient production function is proposed in this study, which comes from the idea that the constant elasticity parameters in the Cobb-Douglas production function can be extended to functional forms. Applying such model to economic growth analysis, on the one hand, the dynamic contribution rate of each input factor can be measured, and, on the other hand, the contribution rate of the input factor can be decomposed into net factor contribution rate and interaction factor contribution rate, thus expanding the explanatory ability of growth rate equation. Using such model, the output elasticity of capital and labor in China’s rice yield growth are calculated from 1978 to 2020, and the dynamic characteristics of the contribution rate of capital, labor and generalized technological progress are analyzed. Next, the capital contribution rate is decomposed according to the composition of the total capital. The results show that: (1) The capital elasticity and labor elasticity are indeed not constant in different years. In China, from 1978 to 2020 the value of capital elasticity was between 0.3209 to 0.3589, with a mean of 0.3437, and the value of labor elasticity was between −0.1759 to −0.1640, with a mean of −0.1730. (2) Natural disasters do affect capital elasticity and labor elasticity in rice production. (3) When the annual proportion of crop disasters increases, the contribution rate of interaction between capital and natural disaster (KDR) value is negative, whereas the contribution rate of interaction between labor and natural disaster (LDR) value is positive. (4) Compared with 1978, the generalized technological progress contribution rate (GTPR) of the rice yield growth in China from 1979 to 2020 shows a declining trend in fluctuations, whereas the total capital contribution rate (TKR) shows a rising trend in fluctuations and the total labor contribution rate (TLR) is relatively stable in the same period. Since 2000, capital investment has become the main factor for the rice yield growth per unit area in China, of which machinery, chemical fertilizer, seed and pesticide are the four most important input factors.

A game between central banks and households involving central bank digital currencies, other digital currencies and negative interest rates

Central Bank Digital Currencies (CBDCs) enable negative interest rates. A game is analyzed between a central bank (accounting for the government’s interest) and a representative household choosing to consume, hold CBDC, or hold non-CBDC. The central bank chooses negative interest rate when it realizes that the household is willing to pay the central bank for holding CBDC. The household pays the negative interest rate because of its Cobb Douglas preferences whereby it values holding CBDC while simultaneously holding the competitive non-CBDC with a given interest rate, consuming with various output elasticities, and accounting for transaction efficiencies and costs. More explicitly, intuition and how the players benefit are provided for the following results: The central bank chooses more negative interest rate when the household’s output elasticity for consumption increases, the household’s output elasticity for holding CBDC decreases, the CBDC and non-CBDC transaction efficiencies increase, the household’s transaction efficiency for consumption decreases, the household’s scaling of the transaction cost increases, the scaling parameter for the central bank’s profit per household decreases, the household’s monetary energy decreases, and the non-CBDC interest rate decreases. The results are determined analytically and illustrated numerically where each of nine parameter values is varied relative to a benchmark.

Fuel substitution and environmental sustainability in India: Perspectives of technical progress

India is the world's third-biggest carbon-emitter after China and the United States. Most of the mixed energy has been dominated by oil, coal, electricity, and gas. This study has attempted to investigate the output elasticities, the possibility of factors substitution, and technological progress between energy and non-energy factors. Ridge regression has been employed to investigate the parameters because of multicollinearity issue in the data. The outcomes illustrate that all energy inputs are substitutes. Gas contributes to only a small proportion of energy, while gas, oil and electricity replace coal in the production process. This will provide the opportunity to substitute coal gas-emitting with renewable energy resources without any risk. Maximum substitution between coal-gas and coal-electricity is found, with lower possibilities to replace coal for oil. The results support that lessening the coal for electricity provides the potential for primary interest. Moreover, the outcomes evidence that the significant role of coal in India converges over future, although slowly. Though, the technological progress is measured to be between −0.0076 and +0.053 among the different input pairs with capital as superior technical progress to energy and labor, which can meet anytime and substitute over time. Finally, these results have broader implications for energy conservation, energy substitution, capital enhancement, and carbon reduction policies in emerging nations. Furthermore, by analyzing technical progress, insights are provided on future carbon mitigation.

Old age pensions and economic development Analyzing the economic return of Pension in Mauritius

This paper attempts to assess the impact of social protection, with particular emphasis on old age pension on the economic growth of the island of Mauritius. The study makes use of rigorous time series econometric analysis over the period 1987 to 2018 to gauge if and the extent to which social protection and pension have been productive in the case of Mauritius. Results show that there is a positive and significant relationship between pension and economic growth in Mauritius. The coefficient of 0.123 is a measure of the efficiency of performance of pension concerning GDP creation. It is a measure of output elasticity of pension. A 1% increase in pension is likely to increase economic growth by 0.12%. In the short run, it is observed that there is an insignificant, although positive link, between pension and economic growth. This may indicate that the effects of pensions are felt on economic growth rather in the long run. The negative lagged value of the Error correction term indicates the existence of a long-term relationship and an adjustment of the effect to its long-run estimate. As far as the other determinants of Mauritian economic growth, it is found that it takes time for them to impact economic growth and thus remain essential long-term influencers.

Impacts of renewable energy on output elasticities and implications for factor shares in European countries: fresh evidence from panel threshold models.

The objective of this paper is to examine, for a panel of seven countries from the European Union, spanning the period 1986-2015, whether the use of renewable energy impacts their output elasticities of capital and labor and, thereby, influences thefactor shares. By applying a set of models from threshold analysis, the analysis detects-for the first time-the presence of thresholds in the use of renewable energy with nontrivial consequences; notably, once the thresholds are crossed, the output elasticity of capital declines, while the output elasticity of labor rises. These changes in the elasticities indicate substantial changes in factor shares triggered by the identified threshold level of renewable energy consumption. This paper also finds changes in output elasticities of factors of production for other threshold variables including energy production from oil and gas or coal. These findings portray a complex and non-linear relationship between energy sources (e.g., renewables and non-renewables) vis-à-vis the economic growth level (e.g.,GDP), with far-reaching consequences for factor shares from using renewables vis-à-vis non-renewables. Accordingly, it can be assumed that the changes in factor shares can, in turn, shape the incentives for the adoption of renewables within the selected European nations. Hence, future economic policies should emphasize the augmentation of renewable energy in the national energy system in order to sustain the rate of economic growth.

Renewable energy substitution and energy technology impact in a transitional economy: A perspective from Pakistan

Almost 87.8% use of fossil fuel in its mixed energy, with only 12.1% coming from electricity, which has taken submerge environmental risk from CO2 emissions (CO2Es). Like many countries, Pakistan has set ambitious goals for a feasible transition towards clean energy sources. In this study, a trans-log production function is adopted to investigate the energy substitution possibility and then estimate the emissions reduction potential that comes through such a conversion. The results show that: (i) all the output elasticities and substitution elasticities contribute to economic development. The research leads towards evidence of efficiency for renewable electricity to add significantly to Pakistan's productivity. Though, it has the prospective to add a 5% growth-share if the capital investment is at least twice beyond present levels. (ii) Based on technological progress, energy substitutability, economy, and inter-fuel substitution are possible. Also, inter-fuel substitutability is limited in exercise because of the heavy costs linked to cleaner energy generation technologies. Moreover, two investment scenarios evidence marginal falls in non-clean energy (between 0.203 and 0.213%) and CO2Es when energy substitutability is conducted. Generally, existing outcomes have insinuations about Pakistan's economic progress, renewable development, and carbon emissions.

Revisiting intertemporal elasticity of substitution in a sticky price model

Macroeconomic models typically assume additively separable preferences where consumption enters the utility function in a logarithmic form. This restriction implies that consumption growth is highly sensitive to movements in real interest rates, which in turn implies an unrealistically steep demand curve and intertemporal trade-off. We re-estimate the stylized New Keynesian Model with US data using King et al. (1988) preferences with and without habits and show that the equilibrium real interest rate elasticity of output is in the range of 0.05–0.20 in the US. Such low real interest rate elasticity is better in line with the empirical consumption Euler equation literature and implies relatively weak transmission of monetary policy to output and inflation.

Operating Mechanism of University Innovation and Entrepreneurship Education and Its Contribution to Regional Economy

China has already ushered in a new economic development stage and its main driving force for the high-quality economic development has gradually shifted to innovation and entrepreneurship and high-level innovative talents. Existing research has ignored to some extent the discussion on regional differences and underdeveloped areas. To this end, this paper studies the operating mechanism of university innovation and entrepreneurship education and its contribution to regional economy. First, based on the theories of human capital and regional economic development, a labor output elasticity estimation model was constructed for regional human resources, to measure the contribution rate of the innovation and entrepreneurship education in regional universities to regional economic development. Considering the complex relationship between university innovation and entrepreneurship education and regional economic development and fluctuations, a suitable VAR model was constructed based on the economic theory to analyze and empirically study the relationship between the two. Finally, the calculation results of the contribution rates of the university innovation and entrepreneurship education in the region and various sub-regions were provided based on the experiment, which verified the effectiveness of the calculation method and analysis model.

Optimal profit and transaction costs for a production function with variable elasticity of output with resources

The published article examines the influence of non-production (transactional) costs of a multifactorial manufacturing enterprise on the formation of its profit. An economic-mathematical model for calculating the profit of an enterprise is proposed, the production function of which takes into account changes in the values of elasticity for each resource, and production (transformation) and non-production (transactional) costs are also described by an exponential function. The features of the formation of profit volumes in the short-term and long-term periods of the enterprise's work are studied. A variant of the calculation model of the maximum possible profit, ignoring the role of transaction costs, and a variant of the calculation model of optimal profit, taking into account the influence of transaction costs, are obtained. The source of transaction costs is the costs of market transactions, for the implementation of which it is necessary to find a subject interested in concluding a transaction, conduct preliminary negotiations with him, prepare a contract and conditions for its implementation, etc. The resources and costs required for all this are the essence of the transaction costs of concluding a deal. It is shown that when calculating the volume of emerging profit, it is necessary to maximize not only the profit function itself, but also the transaction utility function. Numerical analysis of the results of calculations shows the unattainability of the maximum possible values of profit, since in practice the management of the enterprise maximizes not the profit itself, but its utility, expressed as the corresponding transactional function.

THE CONTRIBUTION OF LABOR FORCE, MATERIAL CAPITAL, HUMAN CAPITAL AND TOTAL FACTOR PRODUCTIVITY TO ECONOMIC GROWTH BASED ON THE CHANGE OF EMOTIONAL BEHAVIOR

BackgroundPromoting the sustained and stable growth of the national economy is the eternal goal of economic theory researchers and policy makers. So, what is the fundamental source of promoting a country's sustainable economic growth?Research Objects and MethodsFrom the perspective of labor, physical capital, human capital and total factor productivity, this paper makes an empirical study on the contribution of various input factors to economic growth in 36 OECD countries from 1990 to 2017. In order to analyze the impact of this strategy on the change of livelihood capital on emotion, and provide effective measures and basis for alleviating psychological pressure. In this study, 500 subjects in Southwest China were investigated with Depression Anxiety Stress Scale (DASS-21).ResultsThe results show that: (1) the output elasticity of labor, physical capital and human capital input factors is statistically significant, indicating that input has an important impact on economic growth. (2) The total contribution share of investment accounts for about 1 / 3, of which labor force accounts for about 24%, and the proportion of physical capital and human capital accounts for 5% and 6% respectively is similar and relatively small. (3) Total factor productivity (TFP) is the most important driving force of economic growth, accounting for 2 / 3 of economic growth. (4) The contribution of labor and material capital showed a slow upward trend, the contribution of human capital was basically stable, and the contribution of total factor productivity showed a slow downward trend. (5) Exploring the sources of economic growth has important policy implications not only for OECD countries but also for developing countries. Taking the emotional grouping as the independent variable, the group conducted a one-way multivariate analysis of variance on the fluency and novelty of aut, box's M = 24.05, P < 0.001. The result shows that the data is not suitable for multivariate analysis of variance, so the emotional grouping is used as the independent variable to analyze the fluency and novelty of aut by one-way ANOVA respectively. Specifically, the main effect of emotion on aut fluency is significant, f (2, 99) = 6.43, P = 0.002, η 2 p= 0.12. Post hoc comparison showed that the anger group (M = 11.26, SD = 6.20) was higher than the neutral emotion group (M = 7.26, SD = 3.44, P = 0.002, Cohen's d = 0.80), with no other significant difference (see Figure 2D). The main effect of emotion on the novelty of aut was significant, f (2, 99) = 7.84, P < 0.001, η 2 p = 0.14. Post hoc comparison showed that the anger group (M = 15.29, SD = 8.85) was higher than the sadness group (M = 11.21, SD = 5.50, P = 0.042, Cohen's d = 0.55) and the neutral emotion group (M = 8.91, SD = 5.23, P = 0.001, Cohen's d = 0.88).ConclusionAll sectors of society should fully understand the importance of emotional factors of relevant groups in rehabilitation, actively improve the surrounding environment and the respective roles of both sides, pay special attention to their own virtual technology language and behavior, and shift from single display to multi-dimensional management, coordinator and collaborator. In the process of output, actively present personalized psychology to patients, flexibly organize activities, strive to create a relaxed and harmonious rehabilitation atmosphere, create a friendly and mutual aid business environment, encourage and guide patients to adjust their psychology to the best state.AcknowledgementsThe work is supported by Open Fund Project of Research Center for Economy of Upper Reaches of the Yangtse River of Chongqing Technology and Business University (KFJJ2018002). The author is highly grateful to the editor and anonymous referees for their valuable comments and constructive suggestions which help to improve the present form of this paper.

The Achilles heel of the U.S. food industries: Exposure to labor and upstream industries in the supply chain

AbstractThe modern‐day food industries are part of a complex agri‐food supply chain, where food production has become efficient yet potentially vulnerable to supply chain risks. The COVID‐19 pandemic is a testament to that end. This article measures and identifies the U.S. food manufacturing industries' vulnerability to upstream industries and labor occupations by (a) calculating a food industry's diversification of intermediate input purchases across upstream industries, (b) quantifying the relative exposure of food manufacturing in a given industry and location to upstream input suppliers and labor occupations, and (c) estimating each food industry's gross output elasticity of inputs. This article also explores geographic heterogeneity in food industries' vulnerability. Among our results, we find evidence that the animal processing industry's output is relatively vulnerable to production labor, consistent with the observed disruptions to the meatpacking sector during COVID‐19, which were largely caused by labor issues. Our results may help academics and practitioners to understand food industries' vulnerabilities to upstream industries and labor occupations.

ICT and Economic Growth in EU: A macro Level Comparison of Estimated ICT Output Elasticities

ABSTRACT This paper examines the impact of information and communication technology (ICT) investments on the economic growth of EU-27. Our work responds to the lack of sufficient number of econometric estimation studies at country level coupled with a large variation in ICT elasticity results. We estimate an augmented Cobb Douglas production function using panel data techniques based on a sample of 27 countries for the period 1996–2016. The results suggest a significant effect of ICT investments on GDP growth. Further comparisons are drawn with studies using similar databases and sample periods. The results also reveal that the estimated returns to ICT are three times higher than the ICT factor share. Having excluded several sources of potential excess returns, we conclude that omitted variables and possible complementarities between ICT and organizational capital could serve as a plausible explanation.

Trading off static efficiency and dynamic incentives in apprenticeship relations

In this paper, we study a model of on-the-job training in a monopsonic environment with no enforceability and with imperfect credit markets. A market equilibrium is a relational contract which specifies a sequence of wages, a sequence of productivities for the worker and a termination date which satisfy the worker's and the firm's incentive constraint and maximize profits. We show that no self-enforceable contract can end in a period in which total surplus from employment is negative. If the surplus of employment is always positive, equilibrium contracts are perpetual and involve no wage payment before the worker is fully trained. The worker's expected productivity in an alternative employment grows exactly at the interest rate. For the particular case of a Cobb-Douglas production function for the agent, we show that training is slower for higher productivity coefficient and output elasticity. The effect of the discount rate is ambiguous.