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In: Economics

On the Solow model, are z(Solow residual) and Total Factor Productivity the same?

On the Solow model, are z(Solow residual) and Total Factor Productivity the same?

Or different? Please explain.

Solutions

Expert Solution

The solow residual and the total factor productivity are same and not different. The solow residual represents the non attibutable portion of the output growth. The output growth here cannot be attributed to accumulation of labor and capital. It is a well known measure of productivity growth best known as Total Factor productivity. There are also other factors of production except labor and capital.

Rahul Sunny answered 2 years ago
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