So I am currently trying to write a paper estimating the Constant Elasticity of Substitution Production Function of the USA. I am using the simple version with two inputs capital and labour. Since the estimation is at the aggregate level I thought of using the perpetual inventory method to create the data for aggregate capital, but I wasnt sure what kind of data I need for aggregate labour. Maybe the number of employed people, work force, in the USA? I'd be glad if someone could help me out.
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The Penn Wolrd Tables have the data you need.
answered Feb 8, 2018 at 22:43
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$\begingroup$ so I downloaded it from here and read through the manual rug.nl/ggdc/productivity/pwt so for L I would then take the data for emp (employed people) but since there is a high autocorrelation in there wouldnt that be a problem for the estimations further? Same for capital instead of me constructing the aggregate capital data can't I just take the column rkna (Capital stock at constant 2011 national prices (in mil. 2011US$), but again there is high autocorrelation involved, sorry if my questions are very beginnerish. $\endgroup$– macro123Commented Feb 8, 2018 at 23:23
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$\begingroup$ @macro123 Your questions are to the point. But estimation in an autocorrelation framework is nothing new, you just have to read the relevant time-series econometric literature on how to handle it. $\endgroup$ Commented Feb 8, 2018 at 23:42