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ESTIMATING PRODUCTIVITY GROWTH IN THE KOREAN ECONOMY WITHOUT RESTRICTIVE ASSUMPTIONS
Author(s) -
KIM SANGHO
Publication year - 2014
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/coep.12046
Subject(s) - economics , productivity , presumption , econometrics , capital (architecture) , markup language , solow residual , monetary economics , macroeconomics , total factor productivity , growth accounting , history , archaeology , political science , computer science , xml , law , operating system
This study eliminates the effects of markup, returns to scale, and capital utilization from the Solow residual (SR) for Korea to derive an alternative measure for productivity. Empirical results show that markup generates significant bias in the SR, and that the alternative productivity measure is greater than the residual. Furthermore, money supply Granger‐causes the SR but does not Granger‐cause the alternative measure, suggesting that the new productivity measure is consistent with the neutrality of money. The results contradict the presumption that the SR with variable capital utilization represents true technology shocks because it is orthogonal to demand shocks .( JEL C32, E32, O47)