ON THE PARAMETRIC TESTS FOR SEPARABILITY (ECONOMETRICS, MICROECONOMICS)

The notion of separability plays a fundamental role in characterizing the preference structures of production technologies in applied microeconomics. The introduction of less structured functional forms such as translog, generalized Leontief and the absolute price version of Rotterdam model has made feasible the testing for functional structure such as separability and homotheticity. This testing has become almost a common practice in empirical literature. As the functional forms used for the testing are treated as approximations of some unknown true functions, the question naturally arises as to whether they are flexible enough to capture the properties of the underlying functions. The purpose of this dissertation is to provide an answer to the said question numerically by primarily focusing on the performance of the flexible functional forms in the testing of separability hypotheses.