| dc.description.abstract | When it comes to measure the sources of growth and draw economic policy
conclusions, economists rely on growth accounting. According to this approach,
per capita growth is explained by two sources: capital accumulation and total
factor productivity. Our contention is that growth accounting suffers from serious
pitfalls once we take into account that: (i) Total factor productivity and
investment are not independent of each other, and (ii) Total factor productivity
is badly measured. The result is that the sources of growth are directly unobservable,
undermining any conclusion based on available measures.
To partially overcome these problems, we introduce a technique especially designed
to deal with unobservable, or latent variables, called confirmatory factor
analysis. We examine both the relationship between fourteen variables correlated
to the growth rate and two latent variables: the “savings channel” and
the “productivity channel”, and the correlation between the latter. | |
