Less of a post, and more of an announcement. I just created some new pages here at Growthecon.com that collect resources and materials related to specific topics regarding growth. See the Topics link in the header of the webpage.
This was an exercise in intellectual housecleaning, and a way to organize some materials for possible use in classes in the future. Each topic has links to my own posts on the subject, links to other web articles or resources, and some selected academic citations. The topics are thus more accessible, but less comprehensive, then the pages of references that are also posted on this site.
Right now, the topics include
- Are we rich?
- Can you reform your way to higher growth?
- Does growth depend on competition?
- Does economic growth mean economic development?
- Productivity slowdown
- Is manufacturing special?
- Robots and jobs
- Deep determinants of development
- Does economic growth harm the environment?
It’s a decent start, and there may be a few more topics to show up. The first job is probably to split the topic on productivity slowdown into separate pieces, maybe just on measuring TFP, and then...
You can file this as another example of how measured aggregate TFP growth is like a trash can. It happens to include aggregate technology (which got tossed in there by accident while cleaning up kitchen), but also all sorts of other junk (like leftover coffee grounds). Today’s example shows that even if you are smart about how you construct your measure of aggregate TFP growth, you can still end up with some garbage in there because of aggregation issues. I know this is pushing the analogy, but actually measuing aggregate technology is like trying to wipe up just the waffle crumbs your kids left behind, but not the drops of syrup.
Let me try to give the English-language, and non-garbage related, version of this before turning to the math. To calculate TFP growth, we look at how fast aggregate GDP grew relative to how fast aggregate input use grew. But there is a discrepancy about how we measure GDP growth and how we measure input growth. Aggregate GDP growth is a summation of the growth rate of each individual sector, with each weighted by how big a part of GDP they are. Manufacturing is about 12% of GDP, so a...
In the last post I used some findings by Simcha Barkai and the BLS to infer that housing may a major source of the rise in the share of profits in GDP. I got an e-mail from Simcha regarding the post, and the upshot is that I’m wrong. First, and foremost, it turns out that I got confused reading his paper, and all his calculations exclude residential housing. This means that my inference from comparing the BLS profit share to his profit share is invalid. You cannot conclude that residential housing profits are driving a rise in profits share of aggregate GDP, because there is no information on housing in Barkai’s number. He documents that the profit share of the non-financial corporate sector is rising over time.
So, my bad on that. Simcha also made a point in his e-mail about how the BLS calculates profit shares, and it makes me lean towards his calculations as being correct. But let’s leave that for another day and post. For the time being, you should go forth and freak out about the increasing profit share in the non-financial corporate sector, whatever your preferred explanation for that may be.