What does CES stand for?

Furthermore, in this section we allow the final good's production technology to be of the constant elasticity of substitution (CES) variety and study how the assumed value for the elasticity of substitution between final and intermediate goods affects our results in the steady state.

Factor demand comes from a very general specification of the production function and from weak assumptions, mainly the local approximation of the production function using a constant elasticity of substitution (CES) and constant returns to scale.

10) CES stands for constant elasticity of substitution (see Appendix B for further discussion).

It is well known that the constant elasticity of substitution (CES) form of Equation 1 with [epsilon] > 1 implies the existence of a preference for diversity effect, also termed the degree of (increasing) returns to specialization (e.

j]([tau])d[tau], j = N, S (10) where [rho] is the constant rate of time preference and u([tau]) is the flow of utility at time [tau] determined by consumption of available products via a constant elasticity of substitution (CES) preference structure (Spence 1976; Dixit and Stiglitz 1977), [FORMULA NOT REPRODUCIBLE IN ASCII] (11) [FORMULA NOT REPRODUCIBLE IN ASCII] (12) where [M.

We assume that preferences over goods are given by a quality weighted constant elasticity of substitution (CES) (Dixit-Stiglitz) consumption index: [D.

Cobb-Douglas and constant elasticity of substitution (CES) technologies are also specified.

The measure of liquidity service is assumed to be a constant elasticity of substitution (CES) function of real money holing, [M.