Lecture3

# Lecture3 - Lecture#3 Production and Employment ECON 1110...

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ECON 1110, Spring 2008, Professor T 1 Lecture #3 Production and Employment

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ECON 1110, Spring 2008, Professor T 2 The Production Function General: Y = A × F ( K , N ) Cobb-Douglas Production Function Y = A K 0.3 N 0.7 Observe data on Y , K , N Compute A by N.B. This formula describes the measurement of A; it is not a definition of A. 7 . 0 3 . 0 N K Y A =
ECON 1110, Spring 2008, Professor T 3 Total Factor Productivity (TFP) TFP = A in Production Function Y * K * N ** A A/A(pct) Y/N 1995 8031.7 13555.8 124.900 15.761 64.3 1996 8328.9 13926.3 126.708 16.050 1.8 65.7 1997 8703.5 14336.4 129.558 16.370 2.0 67.2 1998 9066.9 14788.0 131.463 16.723 2.2 69.0 1999 9470.3 15271.6 133.488 17.115 2.3 70.9 2000 9817.0 15782.3 136.891 17.261 0.9 71.7 2001 9890.7 16169.7 136.933 17.261 0.0 72.2 2002 10074.8 16454.8 136.485 17.530 1.6 73.8 2003 10381.3 16735.8 137.736 17.858 1.9 75.4 2004 10755.7 17081.6 139.252 18.248 2.2 77.2 * billions of chained (2000) dollars; ** millions of people

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ECON 1110, Spring 2008, Professor T 4 Does TFP capture technological shocks only?
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Lecture3 - Lecture#3 Production and Employment ECON 1110...

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