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Growth Accounting Framework
The growth accounting framework used in this course is based on the aggregate
production function taking the CobbDouglas 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 workingage 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 workingage 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, workingage 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 Cooperation and Development’s (OECD)
Annual National Accounts
available at www.sourceoecd.com, the International Monetary
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 Spring '08
 MINGYI
 Macroeconomics

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