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http://hdl.handle.net/10419/53230
  
Title:Think again: Higher elasticity of substitution increases economic resilience PDF Logo
Authors:Dumas, P.
Hallegatte, S.
Issue Date:2009
Series/Report no.:Nota di lavoro // Fondazione Eni Enrico Mattei: Sustainable development 66.2009
Abstract:This paper shows that, counter-intuitively, a higher elasticity of substitution in model production function can lead to reduced economic resilience and larger vulnerability to shocks in production factor prices. This result is due to the fact that assuming a higher elasticity of substitution requires a recalibration of the production function parameters to keep the model initial state unchanged. This result has consequences for economic analysis, e.g., on the economic vulnerability to climate change.
Subjects:Substitution
Calibration
Constant Elasticity of Substitution
Shock
JEL:D24
E17
E23
Document Type:Working Paper
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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