Non-Extensive Entropy Econometrics: New Statistical Features of Constant Elasticity of Substitution-Related Models

Second Bwanakare
2014 Entropy  
Power-law (PL) formalism is known to provide an appropriate framework for canonical modeling of nonlinear systems. We estimated three stochastically distinct models of constant elasticity of substitution (CES) class functions as non-linear inverse problem and showed that these PL related functions should have a closed form. The first model is related to an aggregator production function, the second to an aggregator utility function (the Armington) and the third to an aggregator technical
more » ... rmation function. A q-generalization of K-L information divergence criterion function with a priori consistency constraints is proposed. Related inferential statistical indices are computed. The approach leads to robust estimation and to new findings about the true stochastic nature of this class of nonlinear-up until now-analytically intractable functions. Outputs from traditional econometric techniques (Shannon entropy, NLLS, GMM, ML) are also presented.
doi:10.3390/e16052713 fatcat:hy5hvpuy5rctpo5smnzz2lzaci