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d) In the Solow model, an increase in A increases the long-run rate of per capita growth. Exercise D, Measuring technical progress You are
d) In the Solow model, an increase in A increases the long-run rate of per capita growth. Exercise D, Measuring technical progress You are asked to perform a growth accounting analysis for Ethiopia to inform policy makers. Output growth in Ethiopia was 5% per year during the period 2012-2022. Employment growth was 3% per year and capital was growing by 10% in the same period. Suppose that the capital share in income is 0.3 and that there are constant returns to scale. a) What is the main aim of growth accounting? b) What are the main elements in a growth accounting exercise? c) What was the annual growth rate of output per worker? Of capital per worker? d) What was the growth in total factor productivity (technical progress)? e) Suppose now that the capital income share is 0.5. Would your estimate of technical progress in b) change? How?
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