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Growth Accounting and Endogenous Technical Change

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  • Angus C., Chu
  • Guido, Cozzi

Abstract

This study examines the validity of two conventional approaches to growth accounting under endogenous technical change. We find that the traditional approach to growth accounting, pioneered by Solow (1957), is consistent with the lab-equipment specification for technological progress, whereas the more recent approach, proposed by Hayashi and Prescott (2002) and Kehoe and Prescott (2002), is consistent with the knowledge-driven specification. We develop a unified approach to growth accounting, which in essence takes a weighted average of the Solow approach and the Hayashi-Kehoe-Prescott approach. We show that our unified approach is consistent with a more general specification for technological progress under which the degree of capital intensity in the innovation process determines the relative weight placed on the two approaches. Finally, we apply our unified approach to data of the Chinese economy to explore the quantitative importance of capital accumulation on economic growth in China.

Suggested Citation

  • Angus C., Chu & Guido, Cozzi, 2016. "Growth Accounting and Endogenous Technical Change," MPRA Paper 69406, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69406
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    Cited by:

    1. Cozzi, Guido & Davenport, Margaret, 2017. "Extrapolative expectations and capital flows during convergence," Journal of International Economics, Elsevier, vol. 108(C), pages 169-190.
    2. Liu, Dayong & Xu, Chunfa & Yu, Yongze & Rong, Kaijian & Zhang, Junyan, 2020. "Economic growth target, distortion of public expenditure and business cycle in China," China Economic Review, Elsevier, vol. 63(C).
    3. Huang, Junbing & Cai, Xiaochen & Huang, Shuo & Tian, Sen & Lei, Hongyan, 2019. "Technological factors and total factor productivity in China: Evidence based on a panel threshold model," China Economic Review, Elsevier, vol. 54(C), pages 271-285.
    4. Chu, Angus C. & Cozzi, Guido, 2016. "Growth accounting and endogenous technical change," Economics Letters, Elsevier, vol. 146(C), pages 147-150.
    5. Wang, Lan-Hsun & Liao, Shu-Yi & Huang, Mao-Lung, 2022. "The growth effects of knowledge-based technological change on Taiwan’s industry: A comparison of R&D and education level," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 525-545.

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    More about this item

    Keywords

    growth accounting; endogenous technical change; capital accumulation;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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