Working Paper: NBER ID: w15341
Authors: Charles R. Hulten
Abstract: Incomes per capita have grown dramatically over the past two centuries, but the increase has been unevenly spread across time and across the world. Growth accounting is the principal quantitative tool for understanding this phenomenon, and for assessing the prospects for further increases in living standards. This paper sets out the general growth accounting model, with its methods and assumptions, and traces its evolution from a simple index-number technique that decomposes economic growth into capital-deepening and productivity components, to a more complex account of the growth process. In the more complex account, capital and productivity interact, both are endogenous, and quality change in inputs and output matters. New developments in micro-level productivity analysis are also reviewed, and the long-standing question of net versus gross output as the appropriate indicator of economic growth is addressed.
Keywords: Growth Accounting; Economic Growth; Productivity; Capital Formation
JEL Codes: O47; E01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| capital accumulation (E22) | productivity improvements (O49) |
| productivity improvements (O49) | economic growth (O49) |
| capital accumulation (E22) | economic growth (O49) |
| capital deepening (E22) | productivity increases (O49) |
| quality improvements (L15) | productivity growth (O49) |
| capital and productivity interaction (D29) | variations in each other (C39) |