Growth Accounting in the Open Economy: An Array of Perspectives

In this paper, we show how Törnqvist growth accounting in the open economy can be conducted from a number of different perspectives, depending on which input and output prices or quantities are chosen to be the explanatory factors. This approach offers a wide spectrum of decompositions, each one being potentially best suited to analyze specific problems, such as understanding the main factors explaining real GDP or real GDI growth, or those determining the progression of nominal and real gross output, or yet what explains changes in the return to capital or in capital requirements. Special attention is devoted throughout the paper to the measure of technological change, appropriately defined. Actual values for Australia, 1990–2023 are reported as an illustration.