The calibration of CES production functions

The CES production function is increasingly prominent in macroeconomics and growth economics. This paper distinguishes between different uses of normalized CES functions, an approach that has become popular in the literature. The results of Klump and La Grandville (2000) provide a simple way to calibrate the parameters of the CES production function when the necessary data are available. But some of the other applications of normalized CES production functions are problematic, especially when the approach is said to isolate the theoretical effects of varying the elasticity of substitution. (C) 2012 Elsevier Inc. All rights reserved.