Brasch, Thomas von; Raknerud, Arvid; Vigtel, Trond C. - 2022
Simultaneity represents a fundamental problem when estimating the elasticity of substitution between capital and labour … problem of estimating the elasticity of substitution between capital and labour. We propose a pooled GMM (PGMM) estimator … elasticity of substitution to be 1.8 using P-GMM and 1.0 using a fixed effects estimator. Hence, neglecting simultaneity may lead …