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World Productivity Growth: A Model Averaging Approach

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  • Meryem Duygun
  • Jiaqi Hao
  • Anders Isaksson
  • Robin C. Sickles

Abstract

The paper provides a discussion of panel data and productivity analysis in applied economic modeling. We discuss a variety of modeling scenarios and justifications for them based on classical economic theory and on more recent advances in production modeling, which formulate methods to decompose productivity growth based on a Solow-type residual (Solow, 1957) into innovation and catch-up. Methods to combine the various estimates based on different empirical specifications that model and estimate productivity growth are then discussed and these provide the econometric approaches we use to estimate world productivity growth. We also provide a counterfactual analysis of a scenario in which the rise in income inequality since the 1970's in the US is tempered by distributing productivity growth to wage compensation growth as had been the case during the post-WWII years to the early 1970's.
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  • Meryem Duygun & Jiaqi Hao & Anders Isaksson & Robin C. Sickles, 2017. "World Productivity Growth: A Model Averaging Approach," Pacific Economic Review, Wiley Blackwell, vol. 22(4), pages 587-619, October.
  • Handle: RePEc:bla:pacecr:v:22:y:2017:i:4:p:587-619
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    File URL: http://hdl.handle.net/10.1111/1468-0106.12238
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    More about this item

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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