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Contrasting Explanations of Productivity Gains Kevin Stiroh of the Federal Reserve Bank of New York provides a good summary of how both the Solow model and the later endogenous growth models explain technological progress. "The methodological tools developed by neoclassical economists provide a means to measure the rate of technological progress, while models of the new growth economists can provide an internal explanation for technological progress," according to Stiroh. What he has in mind here, of course, is the "Solow residual" as a measure of technological progress, as discussed in Chapter 5. Stiroh's paper will be published in an upcoming issue of the New York Fed's Economic Policy Review: Kevin J. Stiroh (2001), "What Drives Productivity Growth?," Economic Policy Review, forthcoming. The paper is already available over the web at: www.ny.frb.org/rmaghome/econ_pol. |