Please use this identifier to cite or link to this item:
Gandhi, Amit
Navarro, Salvador
Rivers, David
Year of Publication: 
Series/Report no.: 
CIBC Working Paper 2011-9
The estimation of production functions suffers from an unresolved identification problem caused by flexible inputs, such as intermediate inputs. We develop an identification strategy for production functions based on a transformation of the firm's short-run first order condition that solves the problem for both gross output and valueadded production functions. We apply our approach to plant-level data from Colombia and Chile, and find that a gross output production function implies fundamentally different patterns of productivity heterogeneity than a value-added specification. This finding is consistent with our analysis of the bias induced by the use of value-added.
Document Type: 
Working Paper

Files in This Item:
650.72 kB

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.