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title

Economics, my dear Watson

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site name

author

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2026-03-03 08:22:06

raw text

Economics, my dear Watson Economics, my dear Watson Wednesday, July 10, 2019 Lit in Review: 3 for Intermediate Macro The July 2015 American Economic Journal: Macroeconomics had several papers that have something to say to my intermediate macroeconomics students. How good is the Cobb-Douglas production function at describing the real world? Berthold Herrendorf, Christopher Herrington, and Akos Valentinyi, "Sectoral Technology and Structural Transformation" ( working paper ) They use three different functions, one each for ag, manufacturing, and services and they add imported intermediate inputs to the model we use. If they allow each one to have different technology growth, they can "capture the main technological forces behind the postwar US structural transformation" from ag/manufacturing to a services-oriented economy. They tested letting each sector have a different alpha, but it turns out that doesn't make much of a difference. Permanent and transitory income shocks ...

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