Accounting for Growth With New Inputs
NBER Working Paper No. 4114
In this paper we examine how to account for growth when new inputs are being created. In particular, we obtain a decomposition of growth into that due to a higher quantity of existing inputs, and that due to a greater range of inputs. This decomposition is first obtained for a single firm, with a CES production function. We then generalize to the GNP function of an economy. and again show how a decomposition of growth in GNP can be obtained. An example is presented of a two-sector economy, where new inputs are endogenously created each period, and a simple aggregate production function exists. Data for this economy are simulated, and the GNP function is estimated using various different measures of the factor inputs.
Document Object Identifier (DOI): 10.3386/w4114
Published: International Economic Review, May 1994, vol 35, no 2, pp 429-447 citation courtesy of
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