ABSTRACT
In this section of the book we return to our concern with modelling the technology that characterises an economy. The large macro panel data sets that have become available over the past two decades have greatly expanded the scope for quantitative analysis of macro aspects of an economy. The most important data source for aggregate economy data across a large number of countries is the Penn World Tables, which we used extensively in Part 1 of this book. In this chapter we compare technologies across countries to assess whether there are factors common to countries that affect their productivity. That technology differs across countries might seem rather obvious given that poor countries are dominated by an agricultural sector where many, if not most, farms are small-scale, while rich countries are dominated by large-scale industrial and service enterprises. However, our simple macro production function at the aggregate level ignores such differences.
