This paper extends the Lucas (1978) model of firm formation by taking into account a normalised CES function in the production process. In a general equilibrium framework it is proved that there is an inverse relation between the value of the elasticity of substitution and average firm size....

The paper analyzes the inherent risks of paternalistic economic policies associated with the newly established economic sub-disciplines of behavioral economics, happiness economics and economic psychology. While the authors in general welcome these sub-disciplines for enriching and critically...

In this paper, we seek to re-establish the link between the constant elasticity of substitution (CES) production function and neoclassical Solow growth theory. We do so in three dimensions. First, we review the increasing importance of the CES technology in modern dynamic macroeconomics, in...

We analyze a generalized neoclassical growth model that combines a normalized CES production function and possible asymmetries of savings out of factor incomes. This generalized model helps to shed new light on a recent debate concerning the impact of factor substitution and income distribution...

Using a normalized CES function with factor-augmenting technical progress, we estimate a supply-side system of the US economy from 1953 to 1998. Avoiding potential estimation biases that have occurred in earlier studies and putting a high emphasis on the consistency of the data set, required by...