Using the growth accounting equation, if the growth rate of output is 9 percent, the growth rate of labor is 5 percent, the growth rate of technology is 2 percent, and α = 0.8, then the growth rate of capital can be estimated to be:

Question

Quizplus · Accepted Answer

The growth accounting equation is given by the formula: growth rate of output = α(growth rate of capital) + (1-α)(growth rate of labor) + growth rate of technology. Plugging in the given values: 9 = 0.8(growth rate of capital) + 0.2(5) + 2. Solving for the growth rate of capital gives 8 percent.

Using the Growth Accounting Equation, If the Growth Rate of Output