Modelling The Cobb-Douglas Production Function

I’m currently doing some regression analysis on the US aggregate production function. I’m using time-series data for the period 1954-2005. I’ve modeled the US aggregate production function using a log-transformed Cobb-Douglas production function. Using the Ramsey RESET test, I’ve found my model to be misspecified at the 1% level. I found this surprising. Whilst I understand that a simple Cobb-Douglass production function can’t model reality in its entirety, I didn’t expect such strong evidence in favour of misspecification. Obviously, I’ll be carrying out further tests to find the cause of the problem.    

Sanctions Following The Russian Annexation of Crimea

The recent events in Russia have shown the power of speculation in economics. Sanctions imposed on little over 20 individuals have caused huge capital flows out of Russia, causing growth estimates for the first quarter of 2014 to be revised down to nearly 0%. I find that remarkable. Obviously, the direct consequence of those 20-30 individuals having their foreign assets frozen was not $70bn being withdrawn from the Russian economy. Indeed, the direct effects of such sanctions were extremely limited. But, the direct consequences are almost irrelevant. The West has shown it is willing to act against Russian aggression. This is the real economic weapon at The West’s disposal. Creating instability and uncertainty in the Russian economy is a sanction in itself and will only enhance any further sanctions the West decides to impose.

http://www.bbc.co.uk/news/business-26725905