A New Class of Production Function Model and Its Application

Abstract

Under some circumstances, the studies on economic growth theory can be translated into the researches on production function which will beneficial for the government to analyze the pattern of economic growth and then make reasonable policies. The commonly used production functions include C-D production function, CES production function, VES production function with different elasticity of substitution. This paper will put forward to a new class of production function which elasticity of substitution σ is a non-linear function of K / L . With this new model, a calculation formula for accurately measure the influence rates of various factors to economic growth will be derived, which is significant for in-depth studies on functions and scientific measurement. The empirical analysis on the influence rates of China’s economic growth factors and its good results will be presented in the end of this paper.