GrowthAccountingNotes - Growth Accounting Framework The...

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

View Full Document Right Arrow Icon
Growth Accounting Framework The growth accounting framework used in this course is based on the aggregate production function taking the Cobb-Douglas form: 1 , tt t t YA K L α = where t Y is output, t A is total factor productivity (TFP), t K is capital input, t L is labor input, and 1 is labor’s share of income. In order to obtain a decomposition for output per working-age person, we rewrite the above equation as follows: 1 1 1 . t t t YK L A NY N ⎛⎞⎛⎞ = ⎜⎟⎜⎟ ⎝⎠⎝⎠ Written in this form, output per working-age person, t t Y N , decomposes into a productivity factor, 1 1 t A ; a capital factor, 1 t t K Y ⎛⎞ ⎜⎟ ⎝⎠ ; and a labor factor, t t L N . The decomposition requires collecting data for the series of output, capital stock, working-age population, and hours worked. A value for labor’s share of income must also be chosen. Once collected, these series and labor’s share of income allow for the calculation of the TFP series: 1 . t t Y A KL = Data Sources t Y , real GDP: Common sources for real GDP include the Detailed Tables of Main Aggregates in the Organisation for Economic Co-operation and Development’s (OECD) Annual National Accounts available at, the International Monetary
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/07/2011 for the course ECON 3102 taught by Professor Mingyi during the Spring '08 term at Minnesota.

Page1 / 3

GrowthAccountingNotes - Growth Accounting Framework The...

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