**Definition:**CES stands for constant elasticity of substitution. This is a function describing production, usually at a macroeconomic level, with two inputs which are usually capital and labor. As defined by Arrow, Chenery, Minhas, and Solow, 1961 (p. 230), it is written this way:

V = (beta*K^{-rho} + alpha*L^{-rho}) -^{(1-rho)}
where V = value-added, (though y for output is more common),

K is a measure of capital input,

L is a measure of labor input,

and the Greek letters are constants. Normally alpha > 0 and beta > 0 and rho > -1. For more details see the source
article.

In this function the elasticity of substitution between capital and
labor is constant for any value of K and L. It is (1+rho)^{-1}.(Econterms)

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**Books on The CES Production Function:**

- Sargent, Thomas J. 1979.
*Macroeconomic Theory.*New York: Academic Press.

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