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- Title
MEDIUM RUN REDUX.
- Authors
McAdam, Peter; Willman, Alpo
- Abstract
We develop a framework for measuring and analyzing medium-run departures from balanced growth, and apply it to developments in the euro area. A time-varying factor-augmenting production function (mimicking directed technical change) with below-unitary substitution elasticity is shown to account for the observed dynamics of factor incomes shares, TFP growth, and its components. Based on careful data accounting, we also identify a rising markup and the importance of financial-market regulations in the 1970s. The balanced growth path emerges as a special (and testable) case of our framework, as do existing strands of medium-run debates.
- Subjects
ECONOMIC development; EUROZONE; TIME-varying systems; ECONOMIC impact; PRODUCTION functions (Economic theory); ELASTICITY (Economics); INCOME inequality
- Publication
Macroeconomic Dynamics, 2013, Vol 17, Issue 4, p695
- ISSN
1365-1005
- Publication type
Article
- DOI
10.1017/S1365100511000459