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Cobb–Douglas Production Function

Output as a function of capital and labour with constant returns.

Y = A·Kᵅ·Lᵝ models how capital (K) and labour (L) combine to produce output, with A as total factor productivity. When α + β = 1 there are constant returns to scale. The exponents are the income shares of each factor.

Y = A · Kᵅ · Lᵝ      (constant returns when α + β = 1)

Y = A * K**alpha * L**beta

# log-linear form for regression
import numpy as np
ln_Y = np.log(A) + alpha * np.log(K) + beta * np.log(L)