EconPapers    
Economics at your fingertips  
 

The Solow Residual as a Black Box: Attempts at Integrating Business Cycle and Growth Theories

Tiago Mata () and Francisco Louçã
Authors registered in the RePEc Author Service: Francisco Louçã ()

History of Political Economy, 2009, vol. 41, issue 5, 334-355

Abstract: Robert Solow's “Technical Change and the Aggregate Production Function†(1957) has had an enduring influence on macroeconomics. In this article, we examine the history of fluctuations in growth theory through the story of the “Solow residual†as a “black box.†We show that after Solow's seminal contribution, the “residual†became a reproducible object. Losing its ties with the intentions and beliefs of its originator, it was given new and unexpected uses in other branches of macroeconomics. While the residual had always remained a problematic result in growth accounting, its borrowing by real business cycle theorists sought to establish it as a definitive representation of technology. As the claims of the New Classicals came under scrutiny, so did the status and meaning of the object residual. The integration of growth and cycle has since been shaped by the opening of this “black box.†Edward Prescott has remained committed to his earlier interpretation of the “Solow residual†as stochastic technology. Others have sought to bracket multiple supply shocks as the residual, abandoning attempts to decompose it. To the New Keynesians the “residual†has been more evidence of market power and the need to integrate rigidities in the study of the cycle.

Keywords: Robert Solow; Solow Residual; Edward Prescott (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://hope.dukejournals.org/content/41/Suppl_1/334.full.pdf+html link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hop:hopeec:v:41:y:2009:i:5:p:334-355

Access Statistics for this article

History of Political Economy is currently edited by Kevin D. Hoover

More articles in History of Political Economy from Duke University Press Duke University Press 905 W. Main Street, Suite 18B Durham, NC 27701.
Bibliographic data for series maintained by Center for the History of Political Economy Webmaster ().

 
Page updated 2025-03-19
Handle: RePEc:hop:hopeec:v:41:y:2009:i:5:p:334-355