Measurement,Analysis And Application Of Capital Stock And Capital-Labor Elasticity Of Substitution

The paper analyzes the following three questions about31regions of China: estimation of physical capital stock, measurement of substitution elasticity of capital-labor and the relationship between economic growth with capital growth and substitution elasticity of capital-labor.In the present study, there exists some differences about the estimation of physical capital stock of regions in China, and it will cause the reliability of following relevant researches. The paper describes the situation of estimation about physical capital stock of regions in China, and chooses gross fixed capital formation as the index of investment, and chooses GDP index, price index of investment in fixed assets respectively as the index of the price index of investment, and chooses5%depreciation rate,6%depreciation rate, and depreciation as the index of capital depreciation respectively, and chooses the relationship between investment growth rate and base capital stock when in equilibrium and the method of the proportion of capital to output to estimate base capital stock. Finally, it is estimated that physical capital stock of regions in China from1952to2012.It is the precondition of the research for the relationship between economic growth and substitution elasticity of capital-labor that measurement of substitution elasticity of capital-labor precisely. However, it is based on the selection and estimation of production function in some degrees. It is precondition of measurement of substitution elasticity of capital-labor precisely that how to choose or set a reasonable production function.It shows by comparative analysis for production function that GVES production function has some good properties, especially in the aspect of substitution elasticity of capital-labor. GVES production function has the following features:production factors meet requirement of the law of diminishing marginal output of input factors, capital and labor have the complementary relationship, and substitution elasticity of capital-labor has the close relationship with capital per labor, output elasticity of capital, output elasticity of labor. As a result, we choose GVES production function as research instrument. We estimated substitution elasticity of capital-labor, output elasticity of capital, output elasticity of labor, marginal output of capital, marginal output of labor and so on according to the technology parameters in the GVES production function estimated by establishing a fixed effect variable intercept panel model.According to the estimating result of substitution elasticity of capital-labor, it shows increasing trends from1.03346in1995to1.221023in2011with1.0481%of the geometric average annual rate. With the interaction of output elasticity of capital, output elasticity of labor, marginal output of capital, marginal output of labor and capital per labor, substitution elasticity of capital-labor shows increasing trends.Capital growth and substitution elasticity of capital-labor are the essential factors affecting economic growth. We set five different environments, and respectively estimate the impact level and difference situations of capital growth and substitution elasticity for economic growth.In different time environments, it displays increasing trends for the impact of capital growth on the economic growth. And it displays decreasing slowly.trends for the impact of substitution elasticity on the economic growth. In different regional distribution environment, excepting Huadong regions, the other regions shows that the difference impact of capital growth and substitution elasticity on the economic growth is smaller. In different capital to output environment, when it is smaller than3, the impact of capital growth and substitution elasticity on economic growth changes in smaller circle.And when it is bigger than3, the impact of capital growth and substitution elasticity on economic growth shows increasing trends.In different capital per labor environment, the impact level of capital growth on the economic growth changes like "U", and the impact level of substitution elasticity on the economic growth changes like inverse "U". In different capital marginal rate of technical substitution environment, the impact level of capital growth on the economic growth changes like "U", and the impact level of substitution elasticity on the economic growth changes like inverse "U". The research about the estimation of physical capital stock and the measurement of substitution elasticity of capital-labor provides reliable data information for the future relevant study. It is not only better for promoting the research of economic theory, but also availing to facilitate the policy making of regional economic growth. There are two important entry points:the one is that we plan to apply substitution elasticity of capital-labor to dynamic stochastic general equilibrium; the second one is that we plan to estimate regional physical capital stock of three industries or every sector.