![]() Since the capital per worker ratio has a decreasing return rate, the deepening effect of investment has a more significant impact when the ratio is low. The gap between developed and developing countries. Now ignore total factor productivity. It becomes even more critical when the capital per worker ratio is high, as in developed countries. The source of growth. As I explained earlier, total factor productivity is the key to long-run economic growth because labor and capital have a decreasing marginal return. You can also get it on the OECD website, which covers several countries other than the United States. Louis website for the United States’ private business sector. For example, you can find it on the Federal Reserve Bank of St. You will get the error or residual from the regression, and that’s ∆A/A. Then, you regress ∆K/K and ∆L/L against ∆Y/Y. Thus, to obtain total factor productivity growth (∆A/A), you must have data for ∆K/K, ∆L/L, and ∆Y/Y. Meanwhile, ∆A/A represents the residuals of the model. ∆K/K and ∆L/L represent the independent variables (predictors), where α and β show you the impact of growth in capital and labor on aggregate output growth.
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