Normalizing VES production functions: extending the supply-side system approach

Portuguese National Funding Agency for Science, Research and Technology (RCAAP Project by FCT) 2026 Open access

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Authors: Fernando del Río, Francisco Rebelo
Cited by: 0

Abstract

This paper extends the Klump et al. (2007) normalization procedure to Variable Elasticity of Substitution (VES) production functions. Normalization addresses identification issues in VES model estimation, allowing joint estimation of substitution elasticities and factor-augmenting technical change, while offering a tractable extension of the normalized supply-side system that bridges the gap between CES and more flexible VES specifications.

Fields of Study & Subjects

Economic Growth and Productivity Economic Theory and Policy Monetary Policy and Economic Impact

Publication details

Journal / source
Portuguese National Funding Agency for Science, Research and Technology (RCAAP Project by FCT)
Publication date
9 January 2026
Language
EN