Estimation of the Production Function Parameters in V4 Economies

We estimate the production function parameters in V4 economies. The first order condition of the firm optimal behaviour states the equality between wage rate and marginal product of the labour. The CES production function generates the logarithmic relation between average and marginal products of the labour. The Cobb-Douglas production function generates the linear relation between average and marginal products of the labour. We estimate the specifications of V4 economies generated by these models. Using logarithmic specification we estimate the value of the substitutability of the inputs parameter and we test a hypothesis of the Cobb-Douglas production function in the corresponding V4 economy. If we do not reject the hypothesis, we estimate the value of the labour share parameter in corresponding V4 economy using linear specification. We use quarterly data of the compensations of employees and gross domestic product.