Functional Separability and the Existence of Consistent Aggregates in U.S. Manufacturing
The traditional separability tests which are based on the translog production or cost function involve some drawbacks in terms of theoretical consistency as well as empirical implications. This study proposes a new method for testing functional separability, employing an indirect production function formulation and tests the existence of a consistent real value-added aggregate in U.S. manufacturing. Our approach provides a preferable alternative to the existing methods such as Berndt-Christensen's exact separability tests and Denny-Fuss' approximate separability tests in investigating the nature of separability.
production functions, cost functions, aggregation, production costs, production technology, input prices, maximum likelihood estimation, linear separability, search services
Yuhn, Ky-Hyang. "Functional Separability and the Existence of Consistent Aggregates in U.S. Manufacturing." International Economic Review 32, no. 1 (1991): 229-50.