# Is elasticity of substitution between goods empirically constant?

In New Keynesian models, we use a lot of CES assumption, usually Dixit-Stiglitz, to develop an economic model. Is CES, constant elasticity of substitution between goods, empirically (approximately) true?

• My intuition on this subject is no, not for all goods everywhere. However, there is probably a body of goods where it is true -within the relevant range-. In either case, are the assumptions on the new Keynesian models truly dependent on CES, or a way to simply save on massive amounts of algebra? – RegressForward Apr 6 '15 at 14:55