The Aggregate Production Function and the Measurement of Technical Change

The Aggregate Production Function and the Measurement of Technical Change

‘Not Even Wrong’

Jesus Felipe and John S.L. McCombie

This authoritative and stimulating book represents a fundamental critique of the aggregate production function, a concept widely used in macroeconomics.

Chapter 6: What does total factor productivity actually measure? Further observations on the Solow model

Jesus Felipe and John S.L. McCombie

Subjects: economics and finance, methodology of economics, post-keynesian economics, radical and feminist economics, innovation and technology, economics of innovation


With the revival of interest in both growth theory and growth empirics since the 1980s, a number of economists have returned to the important question of why some countries are richer than others. A crucial development in applied work has been the availability of large databases that allow comparisons across countries to be carried out. While some researchers would claim that the profession has advanced and that it has provided useful answers to this question (Mankiw et al., 1992; Jones, 1998 [2002]), others take the opposite view (Kenny and Williams, 2001; Easterly, 2001).As we saw in the last chapter, Solow’s (1956, 1957) seminal growth model is still generally viewed today as the starting point for almost all analyses of growth, notwithstanding the severe reservations raised in the last chapter. Even models that depart significantly from this model are often best understood through comparison with it.

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