On the Application of the VES Production Functions to Simulate the Functioning of Economic Systems
DOI:
https://doi.org/10.14529/ctcr170106Keywords:
production function, substitution of labor by capital, the elasticity of substitution of capital for labor, variable elasticityAbstract
The article presents the results of modeling the functioning of economic systems with the use of production functions with variable elasticity of substitution of capital for labor (VES-function). Currently known analytical dependences for the VES-functions are based on assumptions about the existence of links between certain types of assets-an indicator of the economic system and the marginal rate of substitution of labor factor capital. However, these assumptions on the one hand a certain extent, limit the possibility of building production functions such as VES-function, on the other hand require prior verification of these assumptions on historical data on the functioning of the economic system under consideration. The proposed article the algorithm for constructing the production function of type VES-function does not have these limitations. A comparative analysis of economic systems functioning of the simulation results obtained using the known analytical relationships for the VES-function and the authors proposed an algorithm for constructing this type of production functions showed the feasibility of using this algorithm for solving problems of this type. The simulation used the statistics on the functioning of economic systems, published in the open press.
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