A Study On Aggregate Production Function Of China Based On Time-Varying Parameter

The total production function is the basis of the Macroeconomics Growth Theory and theQuantity of Technology Advancement. In the previous studies, the total production functionwhich parameters are set to be constant makes for easier estimate and partly explainsmacroeconomic conditions. For example, the Cobb-Douglas Productive Function Model andthe CES Productive Function Model. As constructed easily, it is widely used in RCS Analysisabout economic growth.But the assumption that the output elasticity of production requisitesand the total factor productivity are constant is departing from the normal.The output elasticity of production requisites and the total factor productivity are alwaysvarying with time. That is to say, the total production function with constant parameters hasdefects when it is used to study a long term of production. So, we need to build productionfunction with varying parameters. Actually, no much attention has been to paid to the studyyet. The study of the production function with varying parameters is still in its infancy.In this paper, the parametrics are to be regarded as Variable. The article gives out anexpression of variable parametric productive function on the base of C-D Productive FunctionModel with a neutral hypothesis of technical progress. Meanwhile, with the panel data of31provinces through1978-2009in china, its accuracy has been checked and verified. Make astep forward, the author makes three models of the variable parametric productive function todraw comparisons, based on the panel data of31provinces through1978-2009,1989-2009and1995-2009in china. The conclusion reflects the output elasticity of production requisitesand the total factor productivity are varying with time. And the technology of producing is inthe stage of increasing returns to scale.Moreover, Comparing the change trend of the predicated parameter indicat the importantshift in the future of10years. The output elasticity of the capital after1995decreased fasterthan that before, the output elasticity of the labour power after1995increased faster than thatbefore, and the total factor productivity after1995increased slower than that before. We cansee that the economic growth pattern of China is in the transition from extensive type tointensive type in China.