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Using VES Production Functions for Modelling of Economic Systems' Functioning

Author: Gleb A. Sokol and Andrey V. Kutyshkin

Abstract:

The article presents the results of modelling of economic systems' functioning using production functions with variable elasticity of substitution of labour for capital (VES functions). Comparative analysis of the modelling results obtained using the already known analytical dependence for VES functions, with the algorithm proposed by the authors to construct production functions of this type showed the relevance of applying this algorithm to solve analogous problems. The suggested algorithm for constructing VES production functions was tested with the use of statistics published in the open sources.

Keywords: production function; substitution of labour for capital; elasticity of substitution of labour for capital; variable elasticity.

For citation:

Sokol G. A., Kutyshkin A. V. Ispol'zovanie proizvodstvennykh VES-funktsiy dlya modelirovaniya funktsionirovaniya ekonomicheskikh sistem [Using VES Production Functions for Modelling of Economic Systems' Functioning]. Izvestiya Uralskogo gosudarstvennogo ekonomicheskogo universiteta – Journal of the Ural State University of Economics, 2016, no. 2 (64), pp. 123–134.