After 10 years, a committee is established to evaluate the performance of the Norwegian PPE industry....

Transcribed Image Text:

After 10 years, a committee is established to evaluate the performance of the Norwegian PPE industry. They are presented with the following data: Output Employment Capital 2021 100 15 10 2026 300 20 2031 600 60 30 60 a) Assume that the production function is Y = AK L¹-a, where a = : 1/2, Y is output, A is productivity, K is capital and L is labor. Derive the method of growth accounting and calculate 2021-2026 and 2026-2031 productivity growth. b) After publishing the initial findings, the committee is criticized because they did not take into account human capital when calculating productiv- ity. Show mathematically how including human capital alters the growth accounting method. Do you think the findings for productivity in a) are too big or too small? After 10 years, a committee is established to evaluate the performance of the Norwegian PPE industry. They are presented with the following data: Output Employment Capital 2021 100 15 10 2026 300 20 2031 600 60 30 60 a) Assume that the production function is Y = AK L¹-a, where a = : 1/2, Y is output, A is productivity, K is capital and L is labor. Derive the method of growth accounting and calculate 2021-2026 and 2026-2031 productivity growth. b) After publishing the initial findings, the committee is criticized because they did not take into account human capital when calculating productiv- ity. Show mathematically how including human capital alters the growth accounting method. Do you think the findings for productivity in a) are too big or too small?

Answer rating: 100% (QA)

a Assume that the production function is Y AKLa where a 12 Y is output A is productivity K is capital and L is labor Derive the method of growth accou... View the full answer