Productivity and saving channels of economic growth as latent variables: an application of confirmatory factor analysis

• Autores: Bebczuk, Ricardo Néstor
• Año de publicación: 2000
• Idioma: inglés
• Tipo de recurso: documento de conferencia
• Materia: Ciencias Económicas; confirmatory factor analysis; sources of growth
• Institución: Universidad Nacional de La Plata

When it comes to measure the sources of growth and draw economic policy conclusions, economists rely on growth accounting. According to this approach, per capita growth is explained by two sources: capital accumulation and total factor productivity. Our contention is that growth accounting suffers from serious pitfalls once we take into account that: (i) Total factor productivity and investment are not independent of each other, and (ii) Total factor productivity is badly measured. The result is that the sources of growth are directly unobservable, undermining any conclusion based on available measures. To partially overcome these problems, we introduce a technique especially designed to deal with unobservable, or latent variables, called confirmatory factor analysis. We examine both the relationship between fourteen variables correlated to the growth rate and two latent variables: the “saving channel” and the “productivity channel”, and the correlation between the latter.
Facultad de Ciencias Económicas