GROWTH AND CAPITAL DEEPENING SINCE 1870: IS IT ALL TECHNOLOGICAL PROGRESS?*

Jakob Madsen

No 10-09, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: Based on an asset pricing model this paper shows that traditional growth accounting exercises attribute too much weight to capital deepening and suggests a method to filter out TFP-induced capital-deepening from the estimates. Using data for 16 industrialised countries, it is shown that labour productivity and capital deepening have been driven by total factor productivity and reductions in the required stock returns over the past 137 years. Furthermore, it is shown that TFP precedes the K-L ratio and not the other way around.

Keywords: Growth accounting; TFP growth; required stock returns; endogeneity (search for similar items in EconPapers)
JEL-codes: E0 E2 O47 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2009-08
New Economics Papers: this item is included in nep-eff, nep-fdg and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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http://www.buseco.monash.edu.au/eco/research/papers/2009/1009growthmadsen.pdf (application/pdf)

Related works:
Journal Article: Growth and capital deepening since 1870: Is it all technological progress? (2010)
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