Growth Accounting & Cobb Douglas - Do you get the same Growth Rate?

CFA Level II Economics
#1

I understand Growth Accounting says: GDP Growth rate = Lobour Growth rate + Growth in Labour productivity

And Cobb Douglas says: GBP Growth rate = TFP + a.L + (1-a)K

Do these produce the same GBP Growth rate?? Im using Schweser where these formulas are used- interchangebly.

#2

GDP growth rate ≈ growth in TFP (think “technology”) + growth in labour + groeth in capital

#3

Thanks. But you have just repeated the Cobb Douglas formula above. My question is does one get the same answer using that formular with this forumala: GDP Growth rate = Lobour Growth rate + Growth in Labour productivity

#4

I don’t think so. Nothing and no one ever agrees in economics. But I could be wrong. Anyone else?

#5

I will just go by what i have read in the curriculum:

There are two equations for calculating the potential growth rate in GDP:

The equation above (provided by S2000) is called the Growth Accounting equation which is essentially derived from Cobb Douglas equation. Think Growth Accounting equation is also called Solow equation.

The one proposed by broadex is another method for calculating the potential growth rate of GDP.

Both will give you the same result (as per the curriculum)

#6

Not sure which way??