Functional Separability and the Existence of Consistent Aggregates in U.S. Manufacturing.

The traditional separability tests, which are based on the translog production or cost function, involve some drawbacks in terms of theoretical consistency as well as empirical implications. This study proposes a new method for testing functional separability, employing an indirect production function formulation, and tests the existence of a consistent real value-added aggregate in U.S. manufacturing. The author's approach provides a preferable alternative to the existing methods, such as Berndt-Christensen's exact separability tests and Denny-Fuss's approximate separability tests, in investigating the nature of separability. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.