
- UID
- 222311
- 帖子
- 394
- 主题
- 19
- 注册时间
- 2011-7-2
- 最后登录
- 2016-8-1
|
Constant Returns to Scale means:
a given percentage increase in capital stock and labor input results in an equal percentage increase in output.
This means that if each - capital stock and labor inputs - increase by 5%, their total contribution to the real output will be 5% growth - this is because Beta = 1 - Alpha
The Solow Residual (growth in Total Factor Productivity) is not zero for assuming constant returns to scale as shown in CFAI text - solution to 2A - page 183 of Volume 3. |
|