Verification of the Returns to Scale of Production Type for the Russian Federation Regions
Institute of Economics, Russian Academy of Sciences, RU-117218, Moscow, Russia
2 Federal Research Center “Computer Science and Control”, Russian Academy of Sciences, RU-119333, Moscow, Russia
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Published online: 9 December 2019
Monte-Carlo methods to asses a statistical validity of the relationship between coefficients of time series regression model were proposed. In economics such a relationship is present in the case when constant return to scale in production functions is assumed. The techniques being discussed here are virtually free from assumptions about underlying probability distributions and may be used in the case, when target variable or regressors are time series with random walk. This is achieved by comparing the regression model built on truly multivariate time series with those built on simulated time series with random walk. It has been shown that for the production functions of most Russian regions, the returns to scale significantly differs from a constant value at p<0.05.
© The Authors, published by EDP Sciences, 2019
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