I am trying to estimate production functions and want to correct the endogeneity problem from direct estimation.
I found from these notes that it is possible to estimate production functions using instrumental variables (Section 4.1). We have all the information in our dataset that would be required. This includes information on capital prices, labor remuneration, and output prices.
I am just stuck at the moment and don't know how to continue. Are there any published, scientific papers that have used this procedure before?
I also don't know how to aggregate all the prices, i.e., there are many different sorts of capital operating in the production we are observing.
I appreciate any help!
