On the Random Disturbance Term and Parameter Estimation of C-D Production Function

Abstract

Cobb - Douglas production function occupies an important position in econometrics and has a wide range of applications, but the representation of its random disturbance term and the method used for its parameter estimation are open to question. Using mathematical and statistical analysis method, this paper discusses the random disturbance term of C-D production function and data processing methods. Also, a practical example for testing is showed. As a result, we get a new approach for parameter estimation, which are more reasonable and more accurate.