USING THE COBB-DOUGLAS FUNCTION TO ANALYZE ECONOMIC DYNAMICS
Abstract
The purpose of the study is to enhance the capabilities of analyzing the dynamics and efficiency of the national economy, as well as forecasting its development, based on the use of the Cobb-Douglas production function apparatus. To this end, the article demonstrates that production functions, including the Cobb-Douglas function, are powerful tool for analyzing economic dynamics. The advantages of the Cobb-Douglas function and its application peculiarities are analyzed. Production functions enable the evaluation of production efficiency and the productivity of factors such as labor, capital, etc. They can be used to forecast trends in the national economy's development. However, using the Cobb-Douglas production function can cause some problems and limitations. The article presents four calculation options based on actual statistical data of the Ukrainian economy. The analysis of the calculations revealed that it is advisable to use the following indicators to obtain accurate results. The dependent output variable is gross domestic product at actual prices. The independent variables are the cost of capital investment at actual prices and the effective volume of labor. Based on the calculations, the parameters of the Cobb-Douglas production function for the Ukrainian economy were found. The adequacy of the constructed econometric model and the feasibility of its application for analyzing the dynamics of the national economy of Ukraine have been demonstrated. 93.6% of the variation in the gross domestic product depends on the variation in the effective volume of labor and the variation in capital investment. The economic interpretation of the parameters of the constructed Cobb-Douglas production function is provided. It was concluded that labor-intensive economic growth is occurring in the economy of Ukraine, along with a certain tendency towards intensive economic growth. The constructed Cobb-Douglas model was applied to find a point forecast of the gross domestic product. The values of capital return and labor productivity for the economy of Ukraine were determined. The results of the work can be used to analyze the economic dynamics of indicators of the national economy.
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