Elasticity in CES Production Functions: New Estimates for Europe and Different Nesting Structures
用非线性最小二乘法估计欧洲总体和行业层面资本、劳动、能源、材料之间的替代弹性，发现最优嵌套结构，并揭示东欧替代弹性高于西欧、行业弹性随时间变化等特征，为CGE模型提供区域特定参数。
This study addresses the scarcity of empirical estimates on the elasticity of production factor substitutions, a crucial parameter in general equilibrium models for policy analysis. Employing the non-linear least squares estimation method, we determine the elasticity of substitution between capital, labor, energy, and materials in the Constant Elasticity of Substitution model across Europe at both aggregate and sectoral levels. Through rigorous analysis, we identify the optimal nesting structure of the production function for our data, rejecting widely used CES functional forms such as Cobb-Douglas and Leontief. Our findings reveal changes in elasticity of substitution over time, with Eastern Europe exhibiting greater ease of substitution compared to Western Europe, particularly between capital and labor. While elasticities in tertiary sectors diverge over time, those in energy-intensive sectors converge, though they remain statistically different, underscoring the necessity of region-specific elasticity sets in CGE models.