Aggregate Production Functions and Productivity Measurement: A New Look.
Many economists currently take a somewhat jaundiced view of the estimation of aggregate production functions. Three problems seem particularly troublesome; the unobservables problem, especially with regard to utilization, the aggregation problem and the simultaneous equation problems. This paper presents theoretical arguments and empirical evidence from British manufacturing for the view that the first of these is the most serious with important dimensions in the measurement of capital and ou...Expand abstract
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