Abstract
This paper describes a procedure for testing the global properties of functional forms which recognizes their specific role in economic equilibrium modelling. This procedure is employed to investigate the global regularity and third-order curvature properties of three widely used flexible functional forms, the Translog, the Generalized Leontieff and the Normalized Quadratic functional forms. We contrast the properties of these functions with a globally regular flexible form, the Non-separable Nested Constant-Elasticity-of-Substitution functional form. Our results indicate that inherently regular
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Allen, R.G.D. (1938). Mathematical Analysis for Economists, London: Macmillan.
Caves, D.W. and Christensen, L.R. (1980). Global properties of flexible functional forms, American Economic Review 70, 422-432.
Christensen, L.R., Jorgenson, D.W. and Lau, L.J. (1971). Conjugate duality and the transcendental logarithmic production function, Econometrica 39, 255-256.
Despotakis, K.A. (1986). Economic performance of flexible functional forms: Implications for equilibrium modelling, European Economic Review 30, 1107-1143.
Diewert, W.E. (1971). An application of the Shephard duality theorem: A generalized Leontieff production function, Journal of Political Economy 79, 481-507.
Diewert, W.E. and Wales, T.J. (1987). Flexible functional forms and global curvature conditions, Econometrica 55, 43-68.
Frenger, P. (1985). Using the directional shadow elasticity of substitution to measure the concavity of the cost function, Economics Letters 19, 171-175.
Hudson, E.A. and Jorgenson, D.W. (1974). U.S. energy policy and economic growth, 1975-2000, Bell Journal of Economics and Management Science 5(5), 461-514.
Jorgenson, D.W. and Slesnick, D. (1985). General equilibrium analysis of economic policy, in: New Developments in Applied General Equilibrium Analysis, J. Piggott and J. Whalley, eds., Cambridge University Press.
Mundlak, Y. (1968). Elasticities of substitution and the theory of derived demand, Review of Economic Studies 35, 225-236.
Morishima, M. (1967). A few suggestions on the theory of elasticities, Keizai Hyoron(Economic Review) 16, 149-150.
Perroni, C. (1992). Homothetic representation of regular, non-homothetic preferences, Economics Letters 40, 19-22.
Perroni, C. and Rutherford, T.F. (1995). Regular flexibility of nested CES functions, European Economic Review 39, 335-343.
Reister, D.B. and Edmonds, J.A. (1981). Energy demand models based on the Translog and CES Functions, Energy 6, 917-926.
Shoven, J.B. and Whalley, J. (1992). Applying General Equilibrium, Cambridge: Cambridge University Press.
Uzawa, H. (1962). Production functions with constant elasticity of substitution, Review of Economic Studies 30, 291-299.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Perroni, C., Rutherford, T.F. A Comparison of the Performance of Flexible Functional Forms for Use in Applied General Equilibrium Modelling. Computational Economics 11, 245–263 (1998). https://doi.org/10.1023/A:1008641723127
Issue Date:
DOI: https://doi.org/10.1023/A:1008641723127