Use of Production Functions in Econometrics

Abstract

Estimating the connection between factors and the results of production is a difficult problem any econometric model faces. Such models are achieved by creating and motivating the production functions. These functions have a dynamic feature determined by using the time variable expressed by the trend of the production functions. Any production function may be calculated by using calculation techniques, but there are however some difficulties in these calculations. Such difficulties can be overcome by using specific methods. In the production functions, the Cobb-Douglas functions have a special place and are in a certain relation with the functions used by the Leontief model. The functions used in the Leontief model actually express the inputs and outputs that characterise such a model. Coob-Douglas function and the model Leontieff occupies an important place in the design of econometric models. This allows emphasizing connections with science management cybernetics. Science subjects of the category of management components such as political economy, types of management, economic statistics, etc. interrelated with econometrics.