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The Magnitude of the Task Ahead: Macro Implications of Heterogeneous Technology

Eberhardt, Markus; Teal, Francis

Authors

Francis Teal



Abstract

The empirical growth literature is dominated by accounting and regression methods which assume common production technology across countries. Our empirical model relaxes this assumption and further allows unobservable determinants of output (Total Factor Productivity, TFP) to differ across countries and time, while accounting for endogeneity and cross-section correlation arising from global shocks. Using manufacturing sector data for 48 economies we show that the assumption of common technology creates questionable results in accounting exercises and is rejected in our regressions. We illustrate that the erroneous choice of homogeneous technology has substantial impact on patterns and magnitudes of resulting TFP estimates.

Journal Article Type Article
Publication Date 2020-06
Journal Review of Income and Wealth
Print ISSN 0034-6586
Electronic ISSN 1475-4991
Publisher Wiley
Peer Reviewed Peer Reviewed
Volume 66
Issue 2
Pages 334-360
APA6 Citation Eberhardt, M., & Teal, F. (2020). The Magnitude of the Task Ahead: Macro Implications of Heterogeneous Technology. Review of Income and Wealth, 66(2), 334-360. https://doi.org/10.1111/roiw.12415
DOI https://doi.org/10.1111/roiw.12415
Keywords Cross-country analysis; Heterogeneous technology; Total factor productivity;
Publisher URL https://onlinelibrary.wiley.com/doi/full/10.1111/roiw.12415
Additional Information This is the peer reviewed version of the following article: Eberhardt, M. and Teal, F. (2020), The Magnitude of the Task Ahead: Macro Implications of Heterogeneous Technology. Review of Income and Wealth, 66: 334-360, which has been published in final form at Eberhardt, M. and Teal, F. (2019), The Magnitude of the Task Ahead: Macro Implications of Heterogeneous Technology. Review of Income and Wealth. doi:10.1111/roiw.12415. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.
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