The aggregate production function and the measurement of technical change 'not even wrong'
G.C. Harcourt, Jesus College, Cambridge, UK and University of New South Wales, Australia. 'This is a very important book. Proofs that aggregate production functions do not exist have been around for more than 50 years. This casts doubt not only on macroeconomic theory but also on empirical work...
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| Format: | eBook |
| Language: | English |
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Cheltenham
Edward Elgar Pub. Ltd
2013
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| Collection: | Edward Elgar eBook Archive - Collection details see MPG.ReNa |
| Summary: | G.C. Harcourt, Jesus College, Cambridge, UK and University of New South Wales, Australia. 'This is a very important book. Proofs that aggregate production functions do not exist have been around for more than 50 years. This casts doubt not only on macroeconomic theory but also on empirical work and policy. Yet, this has not deterred macro-economists. The authors show in great detail that the apparent "fit" of such functions to value-based data is a tautology and not a proof that such aggregates exist. One hopes that the profession will finally take note.' -- Franklin M. Fisher, Massachusetts Institute of Technology, US. 'Felipe and McCombie have gathered all of the compelling arguments denying the existence of aggregate production functions and showing that econometric estimates based on these fail to measure what they purport to quantify: they are artefacts. Their critique, which ought to be read by any economist doing empirical work, is destructive of nearly all that is important to mainstream economics: NAIRU and potential output measures, measures of wage elasticities, of output elasticities and of total factor productivity growth.' -- Marc Lavoie, University of Ottawa, Canada. This authoritative and stimulating book represents a fundamental critique of the aggregate production function, a concept ... 1. Some problems with the aggregate production function -- 2. The aggregate production function : behavioural relationship or accounting identity? -- 3. Simulation studies, the aggregate production function, and the accounting identity -- 4. 'Are there laws of production?' : the work of Cobb and Douglas and its early reception -- 5. Solow's 'technical change and the aggregate production function', and the accounting identity -- 6. What does total factor productivity actually measure? : further observations on the Solow model -- 7. Why are some countries richer than others? : a sceptical view of Mankiw-Romer-Weil's test of the neoclassical growth model -- 8. Some problems with the neoclassical dual-sector growth model -- 9. Is capital special? : the role of the growth of capital and its externality effect in economic growth -- 10. Problems posed by the accounting identity for the estimation of the degree of market power and the mark-up -- 11. Are estimates of labour demand functions mere statistical artefacts? Anwar Shaikh, New School for Social Research, US. '"There are none so blind as those who will not see." For decades now John McCombie and Jesus Felipe have been publishing papers which draw out the implications of the conceptual vacuousness that characterises fitting aggregate production function specifications to data to test the validity of the marginal productivity theory of distribution, a critique first developed by Henry Phelps Brown and Herbert Simon. By careful empirical and theoretical work, they have reached the conclusion that the huge literature on aggregate production functions and technical progress is "not even wrong" because predictions cannot be tested, that they are only variations on manipulations of national accounting identities. Perhaps this time it really will be "different", the scales will fall from the profession's eyes. I certainly hope so.' -- 'This is an extremely important and long-awaited book. The authors provide a cogent guide to all that is wrong with the theory and empirical applications of the discredited notion of an aggregate production function. Their critique has devastating implications for orthodox macroeconomics.' -- |
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| Physical Description: | 400 p |
| ISBN: | 9781782549680 1840642556 9781840642551 |