The analysis of Klump, McAdam, and Willman (Review of Economics and Statistics, 2007, 89, 183–192) is replicated using alternative software. Their results are verified substantively and, in large measure, numerically. Contributions include a more explicit consideration of the nested testing structure than has appeared previously, and the appropriate means of imposing and testing the special case of logarithmic growth in technology. Also, plots of the likelihood serve to emphasize that maxima in the neighborhood of a unitary elasticity of substitution are often a spurious artifact of the singularity of the model at this point, of which empirical researchers should beware.
Journal of Applied Econometrics – Wiley
Published: Jan 1, 2018
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