Acta Univ. Agric. Silvic. Mendelianae Brun. 2019, 67, 1347-1356

https://doi.org/10.11118/actaun201967051347
Published online 2019-10-31

The Time Augmented Cobb-Douglas Production Function

Lenka Roubalová, Lenka Viskotová

Department of Statistics and Operation Analysis, Faculty of Business and Economics, Mendel University in Brno, Zemědělská 1, 613 00 Brno, Czech Republic

Received August 27, 2019
Accepted October 7, 2019

The main objective of this paper is to propose and verify a time augmentation of the Cobb-Douglas production function parameters which should be able to capture changing conditions over time. The parameters are estimated via the nonlinear least squares method. As data a time series including production and its sources, labour and capital, in the construction industries of six Central European countries for the period 1995–2015 is used. Our results, based on calculation of R2 and Theil’s U, prove that the models containing the time augmented parameters are better than the basic one. Also a verification of evaluated models using the economic reality for each country is given. In addition to the superiority of the time augmented models, these are applicable to distinguish the specifics of the development of productivity in individual countries.

References

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