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Does social capital explain the Solow residual? A DSGE approach

Author

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  • Argentiero, Amedeo
  • Cerqueti, Roy
  • Sabatini, Fabio

Abstract

Abstract Social capital has been credited with playing a role in many desirable economic outcomes. We analyze how these potentially beneficial effects translate into the macro-performance of economies by developing a dynamic stochastic general equilibrium (DSGE) model featuring the role of social capital in the explanation of the Solow residual. We then simulate and estimate the model with Bayesian techniques using Italian data. Our framework fits actual data better than a standard DSGE model, suggesting that social capital may improve the economic performance via its impact on total factor productivity.

Suggested Citation

  • Argentiero, Amedeo & Cerqueti, Roy & Sabatini, Fabio, 2018. "Does social capital explain the Solow residual? A DSGE approach," MPRA Paper 87100, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:87100
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    File URL: https://mpra.ub.uni-muenchen.de/87100/1/MPRA_paper_87100.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    social capital; total factor productivity; Solow residual; DSGE models;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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