We study the behavior of output, employment, consumption, and investment in Germany during the Great Depression of 1928-37. In this time period, real wages were countercyclical, and productivity and fiscal policy were procyclical. We use the neoclassical growth model to investigate how much these factors contribute to the Depression. We find that real wages, which were significantly above their...

This paper develops a simple accounting framework that measures the effect of resource misallocation on aggregate productivity. This framework is based on a multi-sector general equilibrium model with sector-specific frictions in the form of taxes on sectoral factor inputs. This framework is flexible for demand side assumptions such as preference and aggregate production function. Moreover, thi...

Economies of Scale in European Manufacturing Revisited* We test for internal and external economies of scale in European manufacturing, employing a more disaggregated data set than has been used in earlier analyses. We aim to separate externalities from common business cycle effects. Fifteen European manufacturing industries in France, Germany, Italy and the UK are analysed. We focus on economi...

This paper presents an analytic framework with empirical evidence aiming to improve our understanding of the roles of foreign direct investment (FDI) in shaping productivity growth. Specifically, the study empirically examines the effects of FDI on China’s regional productivity growth. Our analyses based on two versions of our model, one excluding and one including human capital, show that FDI ...

The Penn World Tables (PWT) are an important data source for cross-country comparisons. The PWT have undergone several revisions over time and due to these revisions, some well-received evidence based on one version of the PWT may not survive when another version of the data is used. This paper explores such a possibility. Using four publicly available versions of the PWT, we first examine how ...

It is widely argued that declining fertility slows the pace of economic growth through its negative effect on labor supply. There are, however, theoretical arguments suggesting that the effect of falling fertility on effective labor supply can be offset by the associated behavioral changes. We formalize these arguments by setting forth a dynamic consumer optimization model that incorporates end...

In this paper the Malmquist index of total factor productivity is applied to a sample of 87 countries observed over the period 1960-90. This index and the method needed to quantify it, the data envelopment analysis, has substantial advantages as compared to traditional growth accounting. Two of these advantages are that it does not rely on questionable equilibrium assumptions to merge multiple ...

Most Real Business Cycle (RBC) models use the Solow residual as a proxy for a measured aggregate productivity shock. This paper studies implications of the Malmquist productivity index for business cycle analysis using a standard RBC model. By doing this, the study seeks to broaden areas of macroeconomic applications for the Malmquist index. More specifically, this paper chooses aggregate produ...

Traditional empirical strategies for studying convergence—more generally, the dynamics and determinants of economic growth—can be misleading if important, underlying permanent or growth components are stochastically time-varying. This paper documents the degree to which this instability characterizes the data, and then offers an alternative empirical framework. This alternative—directly modelli...

This study contributes to the debate on whether China’s domestic enterprises (DEs) have experienced a significant catch-up compared with foreign-funded enterprises (FFEs) in high-tech industries. Our paper tries to estimate a new set of capital stock and R&D capital stock by ownership for China’s high-tech industries. Then, using this newly constructed data set, it assesses the comparative prod...