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In Solow’s classic (1957) study of technical change in the U.S. economy, he suggests the following aggregate production function: q(t) = A(t) f [k (t)], where q(t) is aggregate output per work hour, k(t) is the aggregate capital labor ratio, and A(t) is the technology index. Solow considered four static models, q/A= α + β ln k, q/A= α − β/k, ln (q/A) = α + β ln k, and ln (q/A) = α + β/k. Solow’s data for the years 1909 to 1949 are listed in Appendix Table F7.2. Use these data to estimate the α and β of the four functions listed above. [Note: Your results will not quite match Solow’s. See the next exercise for resolution of the discrepancy.] |
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