The impact that output has on future total factor productivity is not internalized by competitive agents. As a result, the allocation that a planner would choose cannot be reached as a competitive equilibrium outcome (neither for infinitely lived agents nor for overlapping generations): the market remuneration to capital and labor is too low. The planner's allocation can nonetheless be implemented by a fiscal policy subsidizing the returns to savings and the wage rate as needed. The exact policy differs depending on whether only past investment or total output influences productivity: in the first case only capital returns need to be subsidized, whereas in the second case labor income needs to be subsidized too. The policy is balanced period by period by means of a lump-sum tax.

This commentary reviews Chinese management research since its beginning more than thirty years ago and considers the emerging paths that contemporary scholars may follow. Following Barney and Zhang's (2009) article as well as Whetten's article (2009) in this issue, we first clarify what the two paths (a theory of Chinese management and a Chinese theory of management) would mean for the Chinese scholar. We then discuss the possible interplay between these two paths and suggest it is time to take the road less travelled rather than to over-travel the more popular road. We conclude that practice will prove the final judge on the paths pursued and that the insights from the Barney and Zhang and Whetten articles help sharpen our understanding of the challenges.

This paper explores the main determinants of productivity growth. The analysis is performed using Spanish firm-level data. We define a framework where the relative magnitudes of alternative, but not exclusive, sources of technical change are simultaneously estimated. Our main finding is that the average total factor productivity (TFP) growth is fully explained by embodied technical progress (i.e., either new capital goods or human capital). Our results contradict the existence of a positive contribution of economywide neutral technological progress in determining average TFP growth. They also leave little room for large, unpriced effects external to the firm, both at the aggregate and at the industry level. We find evidence of firm-specific learning by doing, short-lived and due to adoption of new processes.

This paper explores the influence of inflation on economic growth both theoretically and empirically. We propose to merge an endogenous growth model of learning by doing with a New Keynesian one with sticky wages. We show that the intertemporal elasticity of substitution of working time is a key parameter for the shape of the inflation–growth nexus. When it is set equal to zero, the inflation–growth nexus is weak and hump-shaped. When it is greater than zero, inflation has a sizable and negative effect on growth. Endogenizing the length of wage contracts does not lead to inflation superneutrality in the presence of a fixed cost of wage resetting. Adopting various semiparametric and instrumental-variable estimation approaches on a cross-country/time-series data set, we show that increasing inflation reduces real economic growth, consistent with our theoretical model with a positive intertemporal elasticity of substitution of working time.