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“Output can be thought of as a function of
capital labor and technological knowledge.
For a single country the latter variable could
be approximated by time; we can also
consider different countries representing
varying technical levels. Decomposition
about the changes into these factors had
been begun by Tinbergen and Solow.
However, they have been constrained, in
order to achieve manageable formulas, to
use a CobbDouglas production function, in
which output is linearlogarithmic in capital
and labor. This implied that the value shares
of the two factors were in constant proportion
over time.
“I had speculated that the decomposition
might be faulty if the wrong production
function were used, but I had done little
about it. Chenery had been collecting a
great deal of data about different countries.
In particular, a then graduate student at
Stanford, Bagicha Minhas, now a professor
at the Indian Statistical Institute in Delhi,
had been doing careful crosscountry
comparisons and held that the share of labor
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This note was uploaded on 02/01/2011 for the course ECONOMY 6 taught by Professor Fallahi during the Spring '10 term at Cambridge.
 Spring '10
 fallahi

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