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Does the Solow Residual for Korea Reflect Pure Technology Shocks?

Hyunjoon Lim and Sangho Kim

No 777, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: This study investigates the relationship between the measured Solow residual and demand side variables for the Korean economy. The measured Solow residuals are shown to be Granger-caused by some demand side variables such as exports, M1, and government expenditure. A vector error correction model is constructed to investigate dynamic relation between these demand side variables and the Solow residual. Impulse response functions shows that the measured Solow residual moves pro-cyclically with the demand shocks, and that the forecast error variance of the measured Solow residual is mostly explained by past innovations of these demand side variables

Keywords: Solow residual; Productivity shock; Vector error correction model (search for similar items in EconPapers)
JEL-codes: O47 E32 C32 (search for similar items in EconPapers)
Date: 2004-08-11
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