IDEAS home Printed from https://ideas.repec.org/a/hop/hopeec/v41y2009i5p334-355.html
   My bibliography  Save this article

The Solow Residual as a Black Box: Attempts at Integrating Business Cycle and Growth Theories

Author

Listed:
  • Tiago Mata
  • Francisco Louçã

Abstract

Robert Solow's “Technical Change and the Aggregate Production Function” (1957) has had an enduring influence on macroeconomics. In this article, we examine the history of fluctuations in growth theory through the story of the “Solow residual” as a “black box.” We show that after Solow's seminal contribution, the “residual” became a reproducible object. Losing its ties with the intentions and beliefs of its originator, it was given new and unexpected uses in other branches of macroeconomics. While the residual had always remained a problematic result in growth accounting, its borrowing by real business cycle theorists sought to establish it as a definitive representation of technology. As the claims of the New Classicals came under scrutiny, so did the status and meaning of the object residual. The integration of growth and cycle has since been shaped by the opening of this “black box.” Edward Prescott has remained committed to his earlier interpretation of the “Solow residual” as stochastic technology. Others have sought to bracket multiple supply shocks as the residual, abandoning attempts to decompose it. To the New Keynesians the “residual” has been more evidence of market power and the need to integrate rigidities in the study of the cycle.

Suggested Citation

  • Tiago Mata & Francisco Louçã, 2009. "The Solow Residual as a Black Box: Attempts at Integrating Business Cycle and Growth Theories," History of Political Economy, Duke University Press, vol. 41(5), pages 334-355, Supplemen.
  • Handle: RePEc:hop:hopeec:v:41:y:2009:i:5:p:334-355
    as

    Download full text from publisher

    File URL: http://hope.dukejournals.org/content/41/Suppl_1/334.full.pdf+html
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Krasnopjorovs, Olegs, 2013. "Latvijas ekonomikas izaugsmi noteicošie faktori
      [Factors of Economic Growth in Latvia]
      ," MPRA Paper 47550, University Library of Munich, Germany.
    2. Michaël Assous & Muriel Dal Pont Legrand & Harald Hagemann, 2016. "Business cycles and growth," Chapters,in: Handbook on the History of Economic Analysis Volume III, chapter 4, pages 27-39 Edward Elgar Publishing.
    3. Francisco Louçã, 2015. "The improbable econometric connection - Schumpeter and Frisch at the midnight of the century," Journal of Evolutionary Economics, Springer, vol. 25(1), pages 173-184, January.
    4. Pedro Garcia Duarte & Kevin D. Hoover, 2012. "Observing Shocks," History of Political Economy, Duke University Press, vol. 44(5), pages 226-249, Supplemen.

    More about this item

    Keywords

    Robert Solow; Solow Residual; Edward Prescott;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hop:hopeec:v:41:y:2009:i:5:p:334-355. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Center for the History of Political Economy Webmaster). General contact details of provider: http://www.dukeupress.edu/Catalog/ViewProduct.php?viewby=journal&productid=45614 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.