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3. How do we recover parameters from production function estimates (INCOMPLETE ANSWER - will be updated with how to do this in R once I have time to figure it out, or if somebody else knows...) Blundell and Bond aren't estimating the parameters of a Cobb-Douglas production function. They're estimates the parameters of a "dynamic (common factor) ...


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I figured it out: The first-order condition of the cost minimization problem for, say, material inputs $m_{it}$ gives: $ \lambda \frac{\partial F}{\partial M} = P_M $ Where F is the production function, $P_M$ the material input prices. Multiply by $\frac{M}{F}$ and rearrange, $ \lambda = \frac{P_M M}{\beta_M F} $, where $\beta_M$ is the output elasticity ...


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The uniqueness of z comes from the ND of $D^2f$ I believe. Let $z^*(p)$ be the solution of the problem at price $p$. Define the function, $G(p,z):=p \nabla f(z)-w$. From uniqueness we have $z=z^*(p)$ if and only if $G(p,z)=0$. That is, $G(p,z)=0$ is an implicit equation which tells us how $z^*(p)$ changes when $p$ does. The IFT gives us a way to find the ...


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