Real Business Cycles: A Reader

By James E. Hartley; Kevin D. Hoover et al. | Go to book overview

CHAPTER 29

Journal of Economic Literature

Vol. XXXIV (September 1996), pp. 1324-1330

The Discovery of the Residual: A Historical Note

Zvi GRILICHES

National Bureau of Economic Research and Harvard University

THE CONCEPT OF total productivity and the notion that labor is not the only factor of production, that other factors such as capital and land should also be taken into account in a wealth of the nation calculation or a measure of its productivity, were discussed repeatedly in the literature of the 1930s. Two major strands of research came together, ultimately, in what was to become total factor productivity measurement and growth “accounting”: The first developed out of the national income measurement tradition, based largely on the work of NBER and what was later to become the BE A. 1 The second was influenced by Paul Douglas’s work on production functions. His work had been largely cross-sectional, but as time series data became available it was an obvious generalization to add trend-like terms to the function and allow it to shift over time. 2 This re-search tradition had a more econometric background and did not accept, necessarily, the various compromises and assumptions embedded in the national income accounts. It found a fertile soil in agricultural economics, spurred by the presence and teaching of Tintner at Iowa State University (Tintner 1944) and the later work of Earl Heady (see Heady and John Dillon 1961, ch. 1, for an early review of this literature). The two traditions came together in the work of Solow (1957), in some of my own early papers (Griliches 1960 and 1963), and especially in Dale Jorgenson and Griliches (1967). But they have also kept drifting apart.

The first mention of what might be called an output-over-input index that I can find appears in Morris Copeland (1937). 3 Once one started thinking about “real” national income and worrying how to deflate it, it was a relatively short step to the idea that the two different sides of these accounts (product receipts and fac-

1 This tradition and the data bases it developed, together with the development of Keynsian economics, also contributed to the rise of growth theory in the works of Roy Harrod, Evsey Domar, and Robert Solow. But that is a different story.

2 Douglas had been criticized earlier for not allowing for some kind of trend factor in his estimation equation, especially by Horst Mendershausen (1938), a criticism that Jan Tinbergen endorsed in his Econometric textbook, published in Dutch in 1941. Given the increasing availability of time series data and the general advice of that time to use “de-trended” data, it was not long before trend variables began to appear in production function estimation. The first one to do so, as far as I can tell, was Victor Smith in 1940, in his Northwestern Ph. D. dissertation on the productivity of the steel industry, followed by Gerhard Tintner in a number of papers based on data for U. S. agriculture (Tintner 1944 and 1946).

3 More thorough research may unearth even earlier references.

1324

-564-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Real Business Cycles: A Reader
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Acknowledgements xi
  • Part I - Introduction 1
  • Chapter 1 - The Limits of Business Cycle Research 3
  • Notes 34
  • Chapter 2 - A User's Guide to Solving Real Business Cycle Models 43
  • Part II - The Foundations of Real Business Cycle Modeling 55
  • Chapter 3 57
  • Chapter 4 83
  • References 96
  • Chapter 5 97
  • Chapter 6 102
  • Chapter 7 108
  • Part III - Some Extensions 147
  • Chapter 8 149
  • Chapter 9 168
  • References 178
  • Chapter 10 - Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations 179
  • Chapter 11 - The Inflation Tax in a Real Business Cycle Model 200
  • Part IV - The Methodology of Equilibrium Business Cycle Models 217
  • Chapter 12 219
  • Chapter 13 237
  • Chapter 14 254
  • Chapter 15 272
  • Part V - The Critique of Calibration Methods 293
  • Chapter 16 295
  • Chapter 17 - Measures of Fit for Calibrated Models 302
  • Chapter 18 333
  • Chapter 19 355
  • Part VI - Testing the Real Business Cycle Model 381
  • Chapter 20 - Business Cycles: Real Facts and a Monetary Myth 383
  • References 398
  • Chapter 21 399
  • Chapter 22 - Evaluating a Real Business Cycle Model 431
  • Chapter 23 462
  • Chapter 24 496
  • Chapter 25 513
  • Chapter 26 - Did Technology Shocks Cause the 1990-1991 Recession? 533
  • Part VII - The Solow Residual 541
  • Chapter 27 - Technical Change and the Aggregate Production Function 543
  • Chapter 28 552
  • Chapter 29 564
  • Chapter 30 - Output Dynamics in Real-Business-Cycle Models 571
  • Part VIII - Filtering and Detrending 591
  • Chapter 31 - Postwar U. S. Business Cycles: an Empirical Investigation 593
  • Chapter 32 609
  • Chapter 33 626
  • Index 652
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
/ 672

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.