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Empirical Verification of the Applicability of the Cobb-Douglas Production Function for Analyzing the Economy of Russian Regions
https://doi.org/10.34023/2313-6383-2025-32-5-64-74
Abstract
The article examines the production function with Constant Elasticity of Substitution (CES), particularly its special case – the Cobb-Douglas production function – which assumes an elasticity of substitution equal to unity. In many works, the assumption of a unitary elasticity of substitution is challenged, and it is noted that estimates vary depending on the characteristics of the economy under study and the analysis horizon, and can be both significantly lower and higher than unity.
The purpose of the study is to test the hypothesis about the possibility of using the Cobb-Douglas production function to model economic processes at the regional level in the Russian Federation. The CES production function, which depends on two factors – labor and capital (accounting for Hicks-neutral technological progress) – is examined. The assumption that the constant elasticity of substitution of production factors equals unity is tested using statistical data from the Rosstat website for 80 regions of the Russian Federation for the period from 2010 to 2022. The methodology includes panel data analysis to determine the elasticity of substitution between capital and labor, as well as the application of spatial econometrics models that allow spatial effects to be taken into account to minimize bias in estimates due to interregional heterogeneity.
The results of the evaluation of panel data models with the inclusion of spatial effects and control variables do not reject the proposed hypothesis and indicate the applicability of the Cobb-Douglas production function for modeling the economic development of Russian regions.
Keywords
Cobb-Douglas production function,
CES function,
elasticity of substitution of production factors,
panel data analysis,
spatial econometrics,
regions of Russia
Supporting agencies: The Research was funded by the Russian Science Foundation, project No. 25-18-00319, «Economic and Demographic Analysis of the Population Quality of Life in Russia».
About the Authors
I. I. Priimak
Lomonosov Moscow State University
Russian Federation
Russian Federation
Irina I. Priimak – Third Year Postgraduate Student, Assistant Lecturer, Department of General Economic Theory, Moscow School of Economics
1, Leninskie Gory, Bldg. 61, Moscow, 119991
A. O. Belyakov
Lomonosov Moscow State University; Bank of Russia; National University of Science and Technology «MISIS»
Russian Federation
Russian Federation
Anton O. Belyakov – Cand. Sci. (Phys. and Math.), PhD in Economics, Head of Division, Research and Forecasting Department, Bank of Russia; Associate Professor, Moscow School of Economics, Lomonosov Moscow State University (MSU); Associate Professor, National University of Science and Technology «MISIS»
12, Neglinnaya Str., Bldg. V, Moscow, 107016
1, Leninskie Gory, Bldg. 61, Moscow, 119991
4, Leninskiy Ave., Bldg. 1, Moscow, 119049
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Review
For citations:
Priimak I.I., Belyakov A.O. Empirical Verification of the Applicability of the Cobb-Douglas Production Function for Analyzing the Economy of Russian Regions. Voprosy statistiki. 2025;32(5):64-74. (In Russ.) https://doi.org/10.34023/2313-6383-2025-32-5-64-74
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