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Is there really a gap between aggregate productivity and technology?

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  • M. Ali Choudhary
  • Vasco Gabriel

Abstract

The important contribution by Basu and Fernald (2002) shows that, in practice, there is a statistically significant gap between aggregate productivity and technology that can be attributed to inefficient product and labour markets. This is important, as it implies that the Solow residual is an imperfect index for aggregate technology change. We take a related approach and find that when we control for capacity utilization, time varying markup and account for externalities between industries, by employing a superior system estimator, the gap between the aggregate productivity and technology is shown to narrow considerably.

Suggested Citation

  • M. Ali Choudhary & Vasco Gabriel, 2009. "Is there really a gap between aggregate productivity and technology?," Applied Economics, Taylor & Francis Journals, vol. 41(27), pages 3499-3503.
  • Handle: RePEc:taf:applec:v:41:y:2009:i:27:p:3499-3503
    DOI: 10.1080/00036840701537851
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    Cited by:

    1. Moutinho, Ricardo & Au-Yong-Oliveira, Manuel & Coelho, Arnaldo & Manso, José Pires, 2015. "Beyond the “Innovation's Black-Box”: Translating R&D outlays into employment and economic growth," Socio-Economic Planning Sciences, Elsevier, vol. 50(C), pages 45-58.

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