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  • How to calculate Solow Residual in panel data with fixed effect

    Hi,
    I have panel data on firms, how could I calculate Solow Residual with fixed effects in stata. Could anyone give me the codes?
    ​Thanks a lot!

  • #2
    Solow residual is a mathematical calculation
    To know Solow residual = TFP = total factor productivity growth

    Solow residual (z) is calculated by subtracting the growth rate of primary inputs (labor and capital) from the growth rate of output Y
    z = Y– skK– slL

    where
    Y = growth rate of output
    K= growth rate
    of capital input
    L = growth rate of labour input
    sl =shares of labour in output
    sk = shares of capital in output
    Emad A. Shehata
    Professor (PhD Economics)
    Agricultural Research Center - Agricultural Economics Research Institute - Egypt
    Email: [email protected]
    IDEAS: http://ideas.repec.org/f/psh494.html
    EconPapers: http://econpapers.repec.org/RAS/psh494.htm
    Google Scholar: http://scholar.google.com/citations?...r=cOXvc94AAAAJ

    Comment


    • #3
      Originally posted by Emad Shehata View Post
      Solow residual is a mathematical calculation
      To know Solow residual = TFP = total factor productivity growth

      Solow residual (z) is calculated by subtracting the growth rate of primary inputs (labor and capital) from the growth rate of output Y
      z = Y– skK– slL

      where
      Y = growth rate of output
      K= growth rate
      of capital input
      L = growth rate of labour input
      sl =shares of labour in output
      sk = shares of capital in output
      Hello Professor, how to calculate these shares of labour in output? is it L / GDP directly?

      Comment

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