Abstract:
This paper introduces the rank-based estimation method to modelling the Cobb-Douglas production function as an alternative to
the least squares approach. The intent is to demonstrate how a nonparametric regression based on a rank-based estimator can be used to estimate a Cobb-Douglas production function using data on maize production from Ghana. The nonparametric results are compared to common
parametric specification using the ordinary least squares regression. Results of the study indicate that the estimated coefficients of the CobbDouglas Model using the Least squares method and the rank-based regression analysis are similar. Findings indicated that in both estimation
techniques, land and Equipment had a significant and positive influence on output whilst agrochemicals had a significantly negative effect on
output. Additionally, seeds which also had a negative influence on output was found to be significant in the robust rank-based estimation, but
insignificant in the ordinary least square estimation. Both the least squares and rank-based regression suggest that the farmers were operating
at an increasing returns to scale. In effect this paper demonstrate the usefulness of the rank-based estimation in production analysis.
