What is Growth Accounting? What is Total Factor Productivity?
:2.5 FAQID:803 : global, InputDate: 1/6/2007 Reference: Hayami, Yujiro. Development Economics, From the Poverty to the Wealth of Nations, Second Edition, Oxford University Press. p140-142 A: Growth accounting assumes an aggregate production function relating an economy’s output to the inputs of labor and capital. Using this production function, contribution of increase inputs tooutput growth are measured, and any residual not explained by input increases is considered a measure of growtth in the productivity of factor inputs. This residual, called growth in ‘total factor productivity’ (abbreviated as TFP), is a measure of technological progress broadly defined as output growth when input are being held constant.
