I am experimenting with time series data to gauge the importance of factors of production i.e. labour force, capital stock, energy, land, etc. in output growth. One venue I am looking into is the estimation of co-integration model within production function framework.
- Assuming Cobb-Douglas function for the functional form, I wonder what could be a very good proxy for the technical change or TFP. Some studies include trend term in the cointegration equation to account for TFP/technological change.
- I could back out the TFP or Solow residuals using growth accounting method, but I wonder if I can use the derived TFP series in the cointegration equation.
Highly appreciate your thoughts!