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I am carrying out an empirical study wherein I have to judge productivity for two inter-country alliances. While the translog is a better method theoretically the coefficients are insignificant, whereas in Cobb-Douglas they are significant. The gamma stat also shows a better fit for Cobb-Douglas. Is there any reason as to why Cobb-Douglas can be preferred over translog?

Teestaa Saha
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  • Could you explain what a "gamma stat" is? With OLS, it is mathematically not possible to obtain a poorer fit (in terms of $R^2$ or SSR) for a more general function than Cobb-Douglas. How do you measure the fit? – Bertrand Nov 20 '21 at 13:14
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    This might help:

    https://economics.stackexchange.com/questions/18998/why-is-the-cobb-douglas-production-function-so-popular

     – Rumi Nov 21 '21 at 03:55

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