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The technological theory of production and a method of decomposition of the rate of GDP in terms of labour and capital services


  • Vladimir Pokrovski


It is assumed that performance of production system can be described with the three variables: amount of production equipment -- capital stock $K$ and 'consumption' of labour L and capital services S. It is shown that the production function can be specified as the known Cobb- Douglas production function, in which capital services S stands instead of capital stock K, while the state of the production system itself is specified by the technological index 'alpha'. Capital stock plays the role of the means through which the labour resource is substituted by capital services. A method for estimating of capital services and the technological index due to known time series of the output Y, capital stock K and labour L is developed which allows one to separate contributions from production factors and structural change. Empirical evidence for the US economy is used to estimate the validity of the proposed theory.

Suggested Citation

  • Vladimir Pokrovski, 2003. "The technological theory of production and a method of decomposition of the rate of GDP in terms of labour and capital services," Microeconomics 0312001, University Library of Munich, Germany, revised 18 Feb 2004.
  • Handle: RePEc:wpa:wuwpmi:0312001
    Note: Type of Document - Acrobat PDF; prepared on Win98; to print on Star Win Type; pages: 16; figures: 7 (included in file). Acrobat PDF Document

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    References listed on IDEAS

    1. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
    2. Robert M. Solow, 1994. "Perspectives on Growth Theory," Journal of Economic Perspectives, American Economic Association, vol. 8(1), pages 45-54, Winter.
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    More about this item


    Capital productivity; Economic Growth; Investment; Labour productivity; Production function; Solow residual; Technology;

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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