REGULAR FLEXIBILITY OF NESTED CES FUNCTIONS

In this paper we define the class of regular-flexible functional forms as the class of cost functions which are globally well-behaved and ca n provide a local approximation to any globally well-behaved cost func tion. We then offer a constructive proof of flexibility for the Nonsep arable N-stage Constant-Elasticity-of-Substitution functional form (NN CES), by describing a technique through which the NNCES form can be pa rameterized so as to locally capture any regular configuration of inpu t demands and second-order curvature conditions.