The Elasticity of Aggregate Output with Respect to Capital and Labor

A-Tier
Journal: American Economic Journal: Macroeconomics
Year: 2024
Volume: 16
Issue: 4
Pages: 470-504

Score contribution per author:

4.022 = (α=2.01 / 1 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

It is often assumed that the elasticity of GDP with respect to capital is one-third, but this assumes zero markups and an aggregate production function. I estimate the elasticity allowing markups to vary by industry and with a rich input-output structure. Assumptions about capital costs provide bounds on elasticity. In the United States from 1948–1995, the capital elasticity ranged from 0.19–0.32 and shifted to 0.24–0.37 by 1996–2018. Excluding housing or decapitalizing intellectual property lowers bounds to as low as 0.11–0.26. Based on these elasticities, common estimates of total factor productivity growth represent a lower bound.

Technical Details

RePEc Handle
repec:aea:aejmac:v:16:y:2024:i:4:p:470-504
Journal Field
Macro
Author Count
1
Added to Database
2026-01-29