A Cobb-Douglas Simulation. United States Manufacturing

Abstract

This paper produces an algorithm that reproduces the original results of Cobb and Douglas (1928) using restricted ordinary least squares. This algorithm is applied to the United States manufacturing industries during 1987-2023. Data is retrieved from the Bureau of Labor Statistics. A panel econometric model is implemented to analyze durable and nondurable goods with a granularity of three digits. Durable goods technology is more efficient than nondurables. At the industry level “other transportation equipment” is technologically more efficient, while “computers” is the most labor intensive, “chemicals” is the most capital intensive, and “motor vehicles” is the most input intensive.