Utilization-adjusted TFP across countries: Measurement and implications for international comovement

This paper develops estimates of TFP growth adjusted for movements in unobserved factor utilization a panel 29 countries and up to 37 years. When changes are unobserved, the commonly used Solow residual mismeasures actual TFP. We use general equilibrium dynamic multi-country multi-sector model derive production function estimating equation that corrects usage. compare properties utilization-adjusted series standard residual, quantify roles both international business cycle comovement. Utilization-adjusted is virtually uncorrelated across countries, does not generate much GDP comovement through its propagation. Shocks can more successfully account