The Production Function and the Theory of Capital

Robinson, Joan

doi:10.1016/b978-0-12-590550-3.50012-4

Cited by 51 publications

(57 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…In this context it is worth recalling the famous capital controversy between Cambridge University, led by Joan Robinson, and the Massachusetts Institute of Technology and in particular, Paul Samuelson. Essentially our paper lends more credence to the position taken by Robinson, for reasons different from those she proposed (see Robinson (1953)). …”

Section: Introductionsupporting

confidence: 59%

Solow residuals without capital stocks

Burda

Severgnini

2014

Journal of Development Economics

View full text Add to dashboard Cite

For more than fifty years, the Solow decomposition (Solow 1957) has served as the standard measurement of total factor productivity (TFP) growth in economics and management, yet little is known about its precision, especially when the capital stock is poorly measured. Using synthetic data generated from a prototypical stochastic growth model, we explore the quantitative extent of capital measurement error when the initial condition is unknown to the analyst and when capacity utilization and depreciation are endogenous. We propose two alternative measurements which eliminate capital stocks from the decomposition and significantly outperform the conventional Solow residual, reducing the root mean squared error in simulated data by as much as two-thirds. This improvement is inversely related to the sample size as well as proximity to the steady state. As an application, we compute and compare TFP growth estimates using data from the new and old German federal states.

show abstract

Section: Introductionsupporting

confidence: 59%

Solow residuals without capital stocks

Burda

Severgnini

2014

Journal of Development Economics

View full text Add to dashboard Cite

show abstract

“…Macroeconomic production functions have been criticized by scholars who argued that aggregation of output and inputs should be in physical terms, exclusively (Robinson 1953(Robinson , 1971Fisher 1993;Kurz and Salvadory 1995;Felipe et al 2003;Silverberg 2007). A response to this criticism is based on the understanding that the capital stock of industrialized economies consists of all energy-converting and information-processing machines in conjunction with all buildings and installations necessary for their protection and operation, and that output Y results from work performance and information processing by the combination of such capital with (routine) labor 3 L(t) and energy E(t).…”

Section: Output Elasticities and Production Functionsmentioning

confidence: 99%