A_Beginner_s_Guide_to_Growth_Accounting - A Beginner's...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: A Beginner's Guide to Growth Accounting I. The Basics: Y = AK α L (1-α29 , where A is a measure of the level of technology called “total factor productivity,” or “multi factor productivity.” Y can be thought of as the product of 3 factors, so that via percentage change rule #1: ∆ %Y = ∆ %A + ∆ %(K α ) + ∆ %(L (1-α29 ). then using percentage change rule #3: ∆ %Y = ∆ %A + α∆ %K + (1-α29∆ %L, where α is the share of income going to capital, traditionally estimated to be about 0.3 . II. How the estimates are derived: Mankiw's Table 8-3 lists the following (all numbers are percentages): 1995-2002 ∆ %Y = 3.7 α∆ %K = 1.7 (1-α29∆ %L = 0.9 ∆ % Α = 1.1 In reality, Mankiw started with the following numbers: ∆ %Y = 3.7, ∆ %K = 5.7, ∆ %L = 1.3. He got the first two numbers from the Department of Commerce. The average 1....
View Full Document

This note was uploaded on 03/02/2010 for the course ECON 57 taught by Professor Woglom during the Spring '08 term at UMass (Amherst).

Page1 / 2

A_Beginner_s_Guide_to_Growth_Accounting - A Beginner's...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online