In your view, which structure of GDP (income or final expenditure) provides more reliable estimates of elasticities of GDP with respect to capital and labor in the aggregate production function by the equilibrium method?
I recon that both should give similar results (at least with respect to the measurement errors of those elasticities). If you get (significantly) different results than I would start looking for errors (in the data/method/implementation etc).
In a working paper of mine I employed five equilibrium approaches to estimating elasticities in Bulgaria’s aggregate production function. I had two objectives: first, to identify the best equilibrium approach to calculating elasticities in Bulgaria’s aggregate production function; and second, to measure quantitatively the contributions of capital, labor and total factor productivity to Bulgaria's economic growth under a currency board arrangement (CBA). An econometric procedure - ordinary least squares (OLS) estimation of Bulgaria’s aggregate production function - was used to determine the best equilibrium approach to calculating elasticities in this function. The OLS estimation demonstrated that the first equilibrium approach, which was based on the final expenditure structure of Bulgaria’s gross domestic product (GDP), provided the most reliable results of all five equilibrium approaches. The second objective of the research was accomplished by applying the growth accounting (GA) technique to Bulgaria for the period 1997-2013. The GA results implied that total factor productivity and capital stock were the main supply-side determinants of economic growth in Bulgaria under a CBA.
In my view expenditure method gives more reliable estimates of GDP given ease with which more accurate data can be obtained.
Theoretically, both of them should give similar result. In reality however, experience has shown that values from the expenditure approach gives a better result in equilibrium analysis.
i feel Net national product at factor cost at constant prices for the most recent base year should be chosen to understand the elasticities better
I also agree with Urma. GDP calculated according to expenditure method provides better results in equilibrium analysis.
expenditures, production, or incomes these three provides better results
yes. income, expenditure and production structure could provide better results
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