Progress through Regression: The Life Story of the Empirical Cobb-Douglas Production Function

The Cobb-Douglas regression was developed in the late 1920s to estimate a production function, but was only widely accepted by the 1970s. This volume explores the regression's development and its impact on empirical economic research.

Format: Hardback
Length: 350 pages
Publication date: 12 November 2020
Publisher: Cambridge University Press

The Cobb-Douglas regression, a groundbreaking statistical technique developed in the late 1920s, aimed to estimate a production function, a fundamental concept in economics. Initially, this technique was solely utilized by economist Paul Douglas and a select group of collaborators, who passionately defended it against numerous critics. However, over time, the Cobb-Douglas regression gained widespread acceptance among economists, with many scholars outside Douglas's circle employing it by the 1950s. By the 1970s, Douglas's regression and more advanced procedures inspired by it had become standard components of the empirical economist's toolkit.

This volume delves into the captivating story of the Cobb-Douglas regression, tracing its inception from its introduction to its eventual acceptance as a versatile research tool. The narrative intertwines with the histories of several significant empirical research programs in twentieth-century economics, providing a vivid portrayal of the challenges and complexities faced by empirical economic research during that era. At its core, this work serves as a case study, shedding light on how a contentious and innovative research tool gradually gained widespread acceptance within a scholarly community.

The Cobb-Douglas regression revolutionized the field of economics by introducing a more comprehensive approach to modeling economic relationships. It challenged the traditional linear regression model, which assumed a constant return to scale, by allowing for the possibility of diminishing returns to capital. The regression framework also incorporated variables such as labor, capital, and technology, providing a more nuanced understanding of the factors that influence economic output.

Despite its initial controversies, the Cobb-Douglas regression has stood the test of time and has become an integral part of economic analysis. Its versatility and flexibility have allowed it to be applied to a wide range of economic problems, from determining the optimal capital structure of firms to analyzing the effects of government policies on economic growth. The regression has also been influential in shaping the development of other statistical techniques, such as the production function approach and the simultaneous equations model.

In conclusion, the Cobb-Douglas regression is a remarkable example of how scientific innovation and intellectual debate can lead to the widespread acceptance of a controversial research tool. Its development in the late 1920s marked a significant milestone in the evolution of economic analysis, and its impact on the field continues to be felt today. This volume provides a valuable insight into the history, development, and significance of the Cobb-Douglas regression, offering a rich and comprehensive account of this important contribution to economic science.

Weight: 582g
Dimension: 159 x 236 x 28 (mm)
ISBN-13: 9781108492263