Swiss Economicblogs.org
David Baqaee in SED Newsletter, November 2021. Hulten’s theorem: … the elasticity of aggregate TFP to a microeconomic TFP shock is equal to the sales of the producer being shocked divided by GDP. … Furthermore, if labor supply is inelastic or if the definition of GDP is expanded to include the market value of leisure, then this irrelevance result also applies to real GDP (or under some additional assumptions to welfare). This result, oftentimes known as Hulten’s Theorem (Hulten, 1978), is...
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