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Growth And Capital Deepening Since 1870: Is It All Technological Progress?

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  • Jakob B. Madsen

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.

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File URL: http://www.buseco.monash.edu.au/eco/research/papers/2009/1009growthmadsen.pdf
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Bibliographic Info

Paper provided by Monash University, Department of Economics in its series Monash Economics Working Papers with number 10-09.

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Length: 36 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:mos:moswps:2009-10

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Keywords: Growth accounting; TFP growth; required stock returns; endogeneity;

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References

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Citations

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Cited by:
  1. Jakob B. Madsen, 2009. "Growth And Capital Deepening Since 1870: Is It All Technological Progress?," Development Research Unit Working Paper Series 10-09, Monash University, Department of Economics.
  2. Jakob B. Madsen, 2009. "The Anatomy of Growth in the OECD since 1870: the Transformation from the Post-Malthusian Growth Regime to the Modern Growth Epoch," Development Research Unit Working Paper Series 14-09, Monash University, Department of Economics.
  3. Lindmark, Magnus & Andersson, Lars Fredrik, 2014. "Where Was the Wealth of the Nation? Measuring Swedish Capital for the 19th and 20th Centuries," CERE Working Papers 2014:1, CERE - the Center for Environmental and Resource Economics.

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