This paper poses the hypothesis that GDP fluctuations are better modeled by regarding capital as a “sunk cost”, whose returns constitute economic rents, than as a variable input whose price equals marginal cost, as in the basic Cobb-Douglas function. The rationale is that investments require...

Using Gretl, I apply ARMA, Vector ARMA, VAR, state-space model with a Kalman filter, transfer-function and intervention models, unit root tests, cointegration test, volatility models (ARCH, GARCH, ARCH-M, GARCH-M, Taylor-Schwert GARCH, GJR, TARCH, NARCH, APARCH, EGARCH) to analyze quarterly time...

This paper shows that because growth models in the tradition of Solow's and Romer's are framed in terms of production functions, they are equally subject to a criticism developed by, among others, Phelps Brown (1957), Simon (1979a), and Samuelson (1979). These authors argued that production...

It is well known that, in continuous time, the Cobb-Douglas function can be derived from the underlying, data governing, accounting identity under some reasonable assumptions (factor shares are constant, and the weighted growth of the labour input price and the capital input price is constant)....

Combining micro and macro data, we construct demand-side shocks, which we take to be exogenous for individual firms. We estimate a reduced-form model to describe how firms adjust their production, employment, capital stock, and inventories in response to such shocks. Then, we chose the...

This study estimated Tunisia's potential growth with a Cobb-Douglas production function using an unobservable component model within structural changes context for the period 1989-2023. It investigated the major shocks' effects on the potential growth and its components. In contrast with most...