Is Growth Additive?

Callum Jones, David Lopez-Salido and Thomas Philippon

No 35415, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Growth theory is based on the assumption of exponential total factor productivity (TFP) growth, or that the conditional expectation of the next TFP increment is proportional to the current level of TFP. In the U.S., we find strong evidence that TFP growth is conditionally additive, not exponential. Even starting from low priors, Bayesian estimation selects the additive model over the exponential one. In addition, professional forecasts and international TFP series are consistent with the additive model but not with the exponential one.

JEL-codes: C10 E17 N0 O11 (search for similar items in EconPapers)
Date: 2026-07
Note: DAE DEV EFG PR
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