Questions tagged [ces]

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on nested CES--derivation issue

I am reading Sachs and Kotlikoff (2012 NBER) and am wondering how they derive one equation in their paper. The setting is the following: Their model is a variant of the standard two-period ...
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3 votes
1 answer
128 views

The Intuition of CES Utility

Suppose a (symmetric) CES utility function $$U(\mathbf{x})=\left[\int_{\Omega}\left(x_{\omega}\right)^{\frac{\sigma-1}{\sigma}} d \omega\right]^{\frac{\sigma}{\sigma-1}}, \sigma>1$$ 1 The indirect ...
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1 vote
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Derivation of wage rate from nested CES production function

could anyone please help to explain how equation (4) in this paper is derived? I understand that it's an application of first order conditions using the chain rule from equations (1)-(3), but the ...
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3 votes
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An Extension to CES Demand

I am reading a paper with an extended CES final good setting: The representative household consists of a continuum of members, indexed by $k$ $C_{t}=\int C_{k, t} d k$ $C_{k, t}=\left(\int_{j \in \...
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2 votes
1 answer
746 views

Cost function from CES production function

How can I find the cost function $c(w,p)$ given that the production is $$ f(x)=(x_1^p + x_2^p)^{1/p} \ \ for\ \ 0<p <1 $$ I tried to solve it and found that $$TC(y) = \left\{ \begin{...
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  • 61
1 vote
1 answer
76 views

Marshall demand for simple CES utility

Assume that preferences are given by a utility function is given $$u(x_1,x_2) = (x_1^\rho + x_2^\rho)^{1/\rho}$$ what then are the Marshall demand given budget constraint $$p_1x_1 + p_2x_2 \leq I$$
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