ABSTRACT
The neoclassical growth (NG) model has become the established framework for addressing questions in aggregate economics. Its emergence in this role changes the way empirical knowledge about national income and product accounts data is organized. The organization of empirical knowledge implied by the NG framework is very different from that of the system-of-equations (SE) approach, where the focus was on parameters or elasticities in behavioral equations. Much of business-cycle theory represents extensions of the NG model to address questions related to the cyclical behavior of aggregate national income and product accounts data. The SE empirical approach of determining relations between aggregate variables appeared to be a reasonable one and had parallels in the natural sciences. As central as the neoclassical production function is to aggregate theory, a challenging task is to measure the inputs of capital and labor, the latter being particularly important for the measurement of Solow residuals and for business-cycle questions in general.
