Economic performance of flexible functional forms: A correction and comment

Abstract

In a recent article in the European Economic Review Kostas A. Despotakis (1986) examines the properties of flexible functional forms, applying the concept of the inner domain. In the numerical experiments he unfortunately uses an incorrect form of the transcendental logarithmic function. When the correct functional form is used his experimental results are always weakened and sometimes invalidated. In particular, the differences between the considered flexible functional forms are smaller than his experiments would suggest, while the importance of differences in the elasticity of substitution is strengthened. © 1989.