The Illusions of Calculating Total Factor Productivity and Testing Growth Models: From Cobb–Douglas to Solow and Romer
Date
Journal Title
Journal ISSN
Volume Title
Publisher
Abstract
Description
This paper shows why aggregate production functions seem to work empirically.
Aggregate production functions yield high fits and factor elasticities close to the corresponding factor shares because they are approximations to an accounting identity. Authors show through a series of examples why one learns little from the neoclassical growth literature published during the last 6 decades.