Question

Measuring the growth in technology directly is almost impossible. How does the growth
accounting equation allow economists to calculate an implied growth rate for technology?

Answer 1

Increases in productivity is taken into account while calculating the implied growth rate for technology. For this aggregate production function is used to estimate the change which has occurred because of technology. Cobb douglas function gives out an aggregate production function wherein production is equal to real output.

Y=AXL^a XK^b . A is the real output which is availed for the value of work i.e L labour  and capital output that is K. a and b are less than one and indicate loss of productivity in transferring to an aggregate value. A has a output value. L is the number of hours put in and K is capital amount.