ABSTRACT
This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book estimates a preliminary production function for the Jordanian economy. Although many econometric models have been formulated and estimated for the country's economy, none of them has included an aggregate production function. It is a preliminary attempt to specify and estimate an aggregate production function for the Jordanian economy. The Cobb-Douglas production function is widely used in economic analysis and it is used in this study. The function is estimated in log-linear form by the ordinary least squares method. In addition, output elasticity with respect to each input, namely, capital and labour, will be examined. It is assumed that aggregate real output is a function of two factors, capital and labour, and the Cobb-Douglas function is adopted. The ordinary least squares estimation of the log-linear Cobb-Douglas production function shows that labour and capital are significant explanatory variables.
