Monetary values in production functions pose insoluble estimation problem.
The article discusses how estimating production functions can be biased due to the way data is used. By using monetary values instead of physical quantities, the estimated elasticities are affected. The researchers show that the bias in estimated elasticities is actually caused by omitting a term in the data, not by endogeneity. This problem cannot be solved by current estimation methods. Ultimately, using monetary values for production function estimation poses a serious issue that cannot be overcome.