Question

Over the last 50 years in the US, GDP per person has grown at approximately 1% per year, while capital per person has been accumulating at around 0.5% per year. Assume a capital share of 0.3. What is the growth rate of the Solow residual?

Answer 1

Answer:

Explanation:

Growth rate of GDP per worker = growth rate of technology + capital share X growth rate of capital per worker

0.01 = growth rate of solow residual + 0.3*0.005

growth rate of solow residual = 0.0085 =8.5%