A Comparison of the Performance of Flexible Functional Forms for Use in Applied General Equilibrium Modelling

This paper describes a procedure for testing the global properties of functional forms which recognizes their specific role in economic equilibrium modelling. This procedure is employed to investigate the global regularity and third-order curvature properties of three widely used flexible functional forms, the Translog, the Generalized Leontieff and the Normalized Quadratic functional forms. We contrast the properties of these functions with a globally regular flexible form, the Non-separable Nested Constant-Elasticity-of-Substitution functional form. Our results indicate that inherently regular

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