In growth theory, changes in output (GDP) are explained through changes of production factors, i.e. changes in labour or capital. Economists consider the residual, i.e. the part of changes in output that one cannot explain with changes of production factors, as total factor productivity (TFP) or technological change. In contrast to labour productivity, that relates output only to labour, total factor productivity states how efficiently an economy uses all its production factors. Continue reading What is Total Factor Productivity (TFP)?
Newspapers, and in particular economists frequently talk about labour productivity. Especially when commenting the current state of the economy, labour productivity is of central concern. This post will explain the concept of labour productivity and highlight its importance in the context of business cycle analysis. Continue reading What is Labour Productivity?
The Dynamic General Equilibrium Model (DGE) is characterized by various features. Firstly, a DGE is dynamic, which means that it considers an economy over time. Second, it considers a general economy, which implies that the modelled economy is fully specified. Lastly, the model relies on an equilibrium concept. Continue reading General Principles for Specifying a Dynamic General Equilibrium Model