Hello,
I have a function with 4 inputs including capital(K), labor(L), energy(E), and material(M) in a nested CES form: Y=A⋅ {a[b(c⋅K^(-α)+(1-c)⋅E^(-α) )^(ρ⁄α)+(1-b)⋅L^(-ρ) ]^(β⁄ρ)+(1-a)⋅M^β }^((-1)⁄β). My dataset consists of Y, K, L, E, and M data for some manufacturing industry sub-sectors between 1975-2005. Based on this, what is the stata command for the substitution elasticity between K and E? When I use the command nlsur (Y = A * (a * (b*((cK)^(-alpha)+(1-c)((E)^(-alpha)))^(rho/alpha) + (1-b)(L)^(-rho))^(beta/rho) + (1-a)(M)^beta)^(-1/beta)), start(a = 0.5, b = 0.5, c = 0.5, alpha = 0.5, rho = 0.5, beta = 0.5, A = 1), it gives me an initial value error.
It would make me very happy if you could help.
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