Growth accounting and endogenous technical change

- This study explores growth accounting under endogenous technological progress.
- The Solow approach is inconsistent with knowledge-driven technological progress.
- The Mankiw-Romer-Weil approach is inconsistent with lab-equipment technological progress.
- We also examine the importance of capital accumulation on growth in China.

This study explores growth accounting under endogenous technological progress. It is well known that the Solow approach overstates (understates) the contribution of capital accumulation (technological progress) to economic growth and that the Mankiw-Romer-Weil approach addresses this issue. However, we find that the Mankiw-Romer-Weil approach is inconsistent (consistent) with the lab-equipment (knowledge-driven) specification for technological progress. We also examine the importance of capital accumulation on growth in China under the two approaches.