Psychology Dictionary of ArgumentsHome
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| Pseudo-production function: A pseudo-production function in economics resembles a production function mathematically but lacks a direct causal relationship between inputs and output. It often arises in empirical estimations where observed correlations do not reflect true technological constraints, potentially misrepresenting productivity dynamics. See also Aggregate production function, Production function, Cobb-Douglas production function, CES production function, Surrogate production function._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Robert Solow on Pseudo-Production Function - Dictionary of Arguments
Harcourt I 76 Pseudo-Production Function/Solow/Harcourt: The embodiment hypothesis has also been used, especially by Solow, to discuss the process of 'deepening' in a world of non-malleable capital goods, where there is therefore no possibility of ex post substitution, see Solow [1962a(1), 1963b(2)], Robinson [1958(3), 1959(4), 1960(5)]. For “embodiement” (progress in the form of machines) see >Terminology/Harcourt. The model is essentially Salter's but applied at the economy level. The purpose of the exercises was twofold: first, to show that neoclassical methods of analysis could be used and neoclassical results obtained in such a world, especially those that relate to factor productivities and factor rewards; Harcourt I 77 secondly, to argue that observations taken from short-run production functions in which the possibilities of substitution are limited or nil can nevertheless provide data for good estimates of long-run substitution possibilities as the types of machines installed change in response to changes in factor prices over 'time', i.e. in the long period. Pseudo-production function: The pseudo-production function which is estimated is a series of isolated islands of long-period equilibrium. This point is made very clearly in Solow's discussion of a hoary old puzzle, the effect of changes in the wage rate on the use of machinery, see Solow [1962a](1), pp. 215-16. He shows that 'an increase in the wage rate leads to the construction of new machinery of lower (i.e. more mechanized) type' after account has been taken of the need for the higher (equilibrium) wage rate to be associated with a lower (equilibrium) rate of profits. It is also an excellent example of, in this context, a legitimate application of the results of a comparison to an analysis of a change. Harcourt I 78 It is stressed that this is a pure theory of production - the conditions under which the short-run fullemployment level of output will in fact be demanded are not investigated. Constant returns to scale, competitive conditions and static expectations rule. Specific capital goods require fixed complementary amounts of labour to man them, though, because machines are divisible in Champernowne fashion (…) arguments which depend crucially on the ability to employ one more man may be used. >D.G. Champernowne. A simple operating and scrapping rule of positive to zero quasirents presides. An approach which is similar in some respects but which is designed for a different purpose, namely, to analyse the development through accumulation of an economy from the handicrafts industry stage to mechanized, capital-intensive industries, industry by industry, is used by Bensusan-Butt [1960](6) in On Economic Growth. >D. M. Bensuan-Butt. 1. Solow, R. M. [1962a] 'Substitution and Fixed Proportions in the Theory of Capital', Review of Economic Studies, xxrx, pp. 207-18. 2. Solow, R. M. [1963b] 'Heterogeneous Capital and Smooth Production Functions: An Experimental Study', Econometrica, xxxi, pp. 623-45. 3. Robinson, Joan [1958] 'The Real Wicksell Effect', Economic Journal, LXVIII, pp. 600-5. 4. Robinson, Joan [1959] 'Accumulation and the Production Function', Economic Journal, LXDC, pp. 433-42. 5. Robinson, Joan [1960] Exercises in Economic Analysis (London: Macmillan). [1962a] Essays in the Theory of Economic Growth (London: Macmillan). 6. Bensusan-Butt, D. M. [1960] On Economic Growth: An Essay in Pure Theory (Oxford: Clarendon Press)._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Solow I Robert M. Solow A Contribution to the Theory of Economic Growth Cambridge 1956 Harcourt I Geoffrey C. Harcourt Some Cambridge controversies in the theory of capital Cambridge 1972 |
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