2014 ,№1

To the Dimension Problem in Economics: Production Function as a “Pseudo-Black Box”

Abstract:

The problem under consideration is so-called «dimension problem» which is arising sporadically in foreign and Russian economic literatures with respect to production functions (PF) and utility functions (UF), used in economic theory and economic analysis. Critics of these functional models declare illegitimacy the application of transcendental operations (taking a logarithm, rising to a fractional power) to “dimensional variables” and suppose only an index variant of PF and UF. The paper rejects the dimensional claims for fragments of production functions, and proves inconsistency and counterefficiency of restriction of the PF method by the index variant. Also usefulness of the later variant for overcoming of computational problems is stated.

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Vladimir K. Gorbunov – Dr. Sci. (Phys.-Math.), Professor, Head of the Department of Economic and Mathematical Methods and Information Technologies, Ulyanovsk State University (Ulyanovsk, Russian Federation; e-mail: vkgorbunov@mail.ru).