Micro- and Macroeconomic Production Functions

There exist both micro- and macroeconomic production functions. Microecoinomic functions concern individual firms whereas macroeconornic functions are valid e.g. for whole industries or branches of national economy. On the basis of suitably chosen numerical examples it is shown that the usual aggregation procedure by summing sometimes leads to nonsensical, or heavily biased results. By performing the same computations on data for average firms better results are obtained. If we use the Cobb-Douglas production function, aggregation must be multiplicative and thus geometric means are appropriate It can be shown, however, that, if the dispersion of the variables involved is small and the respective measures are approximately equal, then arithmetic instead of geometric means can be used. An attempt is made to evaluate production functions for certain industries in Poland in 1965 on the basis of data concerning average firmis in 22 territorial units (voivodships). In order to use the available data certain assumptions have to be made. If these assumptions are confirmed the goodness of fit must be very satisfactory. Thus it seems very plausible that a good fit proves the assumption to be confirmed. The goodness of fit is measured by coefficients of determination. The attempt has proved successful, as is shown by the values of the coefficients of determination which, in some instances, are very close to unity. On the base of these results characteristic features of particular industries are discussed.Digitalizacja i deponowanie archiwalnych zeszytów RPEiS sfinansowane przez MNiSW w ramach realizacji umowy nr 541/P-DUN/201