A.7 Consider the following aggregate production function a Yt = At (ut Kt) N₁-a where ut is capital utilization. If TFP is measured without taking into account ut, how would this measured TFP correspond to At? What implications could this have when we attempt to take the Neoclassical model to data?

A.7 Consider the following aggregate production function a Yt = At (ut Kt) N₁-a where ut is capital utilization. If TFP is measured without taking into account ut, how would this measured TFP correspond to At? What implications could this have when we attempt to take the Neoclassical model to data?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter9: Production Functions

Section: Chapter Questions

Problem 9.6P

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