Analysis of the Methodology of Constructing a Production Function Using Quality Criteria

Abstract

In the article to forecast the trends of development of the state’s industry (for example, Ukraine), a method for evaluating the parameters included in the classical Cobb-Douglas formula is developed. On the basis of the computational experiment it was established that if the values of the production function Y are close to the numerical values and the deviation between them does not exceed 3.7 %, then for approximation of Y in the industry for small time periods, it makes no sense to complicate the set of its parameters and coefficients. For forecasting the values of Yi (Yi Î Y) we have evaluated the parameters that are included in the classical Cobb-Douglas formula. To improve the methodology for estimating the coefficients included in the Cobb-Douglas type formula, new variants of the multiplicative and additive quality criteria and for the Ukrainian industry are proposed, based on the analytical data for 2010–2017, the evaluation of the relevant criteria was carried out.

Keywords

• production function
• Cobb-Douglas function
• quality criteria
• industry
• industrial products