1
$\begingroup$

I've been reading about the translog production function and know its really just a log-log production function approximated using a first order maclauren series.

Why not just leave the function as is? What economic interpretation or use does taking taylor series do for us?

$\endgroup$
2
$\begingroup$

You will gain in flexibility and generality by adding more terms and avoid to impose restrictions on substitution between inputs and returns to scale, that are usually rejected (when tested).

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.