M&B3 3rd Edition by Dean Croushore

Exercise 15

Suppose that in 2013 a country has capital of 450 units, labor of 5,000 units, and output of 10,000 units. In 2014, the country has capital of 480 units, labor of 5,050 units, and output of 10,300 units. In both years, a = 0.2 in Equation (4). Calculate the level of TFP in both years and the growth rate of TFP from 2013 to 2014.