We prove that in a closed economy without distortionary taxation, the welfare of a representativeconsumer is summarized to a …rst order by the current and expected future values of the Solowproductivity residual in level and by the initial endowment of capital. The equivalence holds if...

We prove that the change in welfare of a representative consumer is summarized by thecurrent and expected future values of the standard Solow productivity residual. Theequivalence holds if the representative household maximizes utility while taking pricesparametrically. This result justifies TFP...

Rather than charging direct fees, banks often charge implicitly for their services via interest spreads. As a result, much of bank output has to be estimated indirectly. In contrast to current statistical practice, dynamic optimizing models of banks argue that compensation for bearing systematic...

"Yes. We construct a measure of aggregate technology change, controlling for varying utilization of capital and labor, non-constant returns and imperfect competition, and aggregation effects. On impact, when technology improves, input use and non-residential investment fall sharply. Output...

What is the output of financial institutions? And how can we measure their nominal and, more importantly, real value, especially since many financial services are provided without explicit charges? This paper summarizes the theoretical result that, to correctly impute the nominal value of...