Analysis Of Implicit Assumptions On Cobb-douglas Production Function

Since the industrial revolution,under the guidance of the technology spillover effect of Europe and the United States,the world economy is gradually changing from the supply-constrained economic situation to demand-constrained economic situation.The premise assumptions of the new classical economics theory have become unfitted for the market conditions.Lots of theories that are original effective have been invalid for the analysis of demand-constrained economic situation.This paper discusses the implicit assumption of Cobb-Douglas production function from supply-demand economic situation.It is considered that the function is effective in the supply-constrained economy,and invalid in demand-constrained economy.Only in the supply-constrained economy,can is it possible to ensure that Capital in statistical data all in the process of production,that is,the capital can be regarded as one hundred percent of the "effective capital".When the economy has entered a demand-constrained economic situation,if the effective demand is insufficient,manufacturers will reduce production and even out of business.So,the whole society will have a constantly changing proportion of capital which is the "invalid capital".We hypothesize the idle rate of capital in China,the United States and Japan when they enter the demand-constrained economy,and find that the output elasticity of each situation is different under different "effective capital" conditions.Therefore,the analytic result of economic growth factor based on Cobb-Douglas production function is not reliable in demand-constrained economic situation...