Growth accounting

Question 1

X-dot(t) is for _______ time and is the ______, calculated by _____

Answer 1

continuous; change of X; dX(t)/ dt

Question 2

delta-X is for _______ time and is the ________, calculated by _____

Answer 2

discrete; change of X; [(X_t+delta-t - X_t) / delta-t]

Question 3

Growth rate of X in continuous time is ______

Answer 3

X-dot / X = d(In X)/ dt

Question 4

Growth rate of X in discrete time is ______

Answer 4

delta-X / X_t = [ (X_t+delta-t - X_t) / delta-t ] / X_t

Question 5

To find growth rate in continuous time, take ____ then _____ with respect to _____

Answer 5

log; differentiate; time

Question 6

Using Cobb-Douglas production function Y = A(t) K(t)^a L(t)^(1 - a), growth rate of Y is _____. All the variables are a function of ____

Answer 6

A-dot/A + a K-dot/K + (1 - a) L-dot/L
g_A + a g_K + (1 - a) g_L
time

Question 7

g_A is the ______ and ____ measured empirically.

g_Y, g_K, g_L and alpha _____ measured empirically.

Answer 7

Solow residual; cannot be

can be

Question 8

g_Y/L =

Answer 8

g_Y - g_L

Question 9

To measure alpha, maximise _____ function, find ______ and rearrange

Answer 9

profit; optimality conditions

Question 10

Suppose no depreciation of capital

Profit =

Answer 10

AF(K, L) -rK -wL

Question 11

Optimality conditions are

Answer 11

MPK = r
MPN = w

Question 12

Y = AK^aL^(1-a)

MPK in terms of Y = capital share = ______

Answer 12

aAL^(1-a)K^(a-1) = a Y/ K

Question 13

Y = AK^aL^(1-a)

MPN in terms of Y = labour share = ______

Answer 13

(1-a)AK^aL^-a = (1-a) Y/ L

Question 14

alpha =

Answer 14

r = a Y/ K --> a = rK/Y
w = (1-a) Y/ L --> a = 1 - wL/Y

Question 15

Standard estimation of alpha in US is _____

Answer 15

0.33-0.36

Question 16

g_A of US reduced substantially in the ______ becos of

1) ______
2) ______
3) ______
4) ______

Answer 16

1970s

1) sharp increases in oil price in 1970s
2) structural changes: shift from manufacturing to services
3) reduction in resources spent in R&D in late 60s
4) TFP abnormally high in 50’s and 60’s [g_A = A-dot/A, since A high, g_A low]

Question 17

Most of the growth in East Asian miracles were due to ______ rather than ______

Answer 17

growth in inputs; growth in TFP