Growth Accounting in the Open Economy: Parametric and Nonparametric Estimates

Abstract

The purpose of this paper is to identify the individual contributions of the major factors explaining U.S. nominal GNP growth in an open-economy setting: technological change, increases in the endowments of labor and capital, movements in the terms of trade, and domestic output price changes. We follow in turns a non parametric and a parametric approach. Both have a tight theoretical foundation, being based on the GNP function approach to modeling the production sector of an open economy.