Empty sources of growth accounting, and empirical replacements à la Kaldor and Goodwin with some beef

Standard sources of growth accounts are empty of content because they rely on neoclassical production theory. Rather, analysis can be based on productivity growth equations derived from national income and product accounts (NIPA) accounting conventions and a helpful algebraic identity. These schemes impose valid restrictions on growth rates of the wage rate, profit rate, capital, labor, and their respective average productivities. One states that the output growth rate equals employment growth plus productivity growth. The standard “convergence” model basically adds accumulation dynamics to this identity. Replacing the aggregate production function with proper accounting restrictions gives a growth model with detailed results that differ markedly from those of the standard model. Alternative, essentially Kaldorian supply- and demand-based alternatives to sources of growth based on a familiar output growth versus productivity growth diagram with constant employment growth contours added in look like a useful alternative to the mainstream models. With distributive dynamics added in, the model would also generate Goodwin-style cycles.