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Directed technological change, factor adjustment, and GDP: Two decompositions with OECD evidence

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  • Feder, Christophe
  • Antonelli, Cristiano

Abstract

We propose a growth-accounting approach based on a time-varying Constant Elasticity of Substitution (CES) production function that decomposes the total technological effect on GDP into neutral and non-neutral components, separating pure productivity from effects induced by factor-quantity adjustments. Applied to a balanced panel of 32 OECD countries (1994–2019), the method shows that most of the technological impact on GDP arises from non-neutral components operating mainly through adjustments in factor composition and quantities, while the direct productivity contribution is often weak or negative.

Suggested Citation

  • Feder, Christophe & Antonelli, Cristiano, 2026. "Directed technological change, factor adjustment, and GDP: Two decompositions with OECD evidence," Economics Letters, Elsevier, vol. 261(C).
    • Handle: RePEc:eee:ecolet:v:261:y:2026:i:c:s0165176526000510
    DOI: 10.1016/j.econlet.2026.112857
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