Work

The Magnitude of the Task Ahead: Macro Implications of Heterogeneous Technology

Year: 2019

Type: article

Abstract: The empirical growth literature is dominated by accounting and regression methods that assume common production technology across countries. Our empirical model relaxes this assumption and further allows unobservable determinants of output (total factor productivity, TFP) to differ across countries and time, while accounting for endogeneity and cross‐section correlation arising from global shocks. Using manufacturing sector data for 48 economies, we show that the assumption of common technology is rejected in our regressions. We illustrate that the erroneous choice of homogeneous technology has a substantial impact on the patterns and magnitudes of the resulting TFP estimates.

Source: Review of Income and Wealth

DOI: 10.1111/roiw.12415

Authors: Markus Eberhardt, Francis Teal

Institutions: University of Nottingham, Centre for Economic Policy Research, IZA - Institute of Labor Economics, University of Oxford

Language: English

Topic: Economic Growth and Productivity

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: green

Funder: Economic and Social Research Council