Equation 4 · Selection Accounting: The Price Equation Runs the Economy
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Symbol w_i
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subscript
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What the article says around this equation
The change in mean log productivity splits into a covariance between a firm’s relative fitness — its share-growth factor — and its productivity, plus a share-weighted average of each firm’s own productivity change, weighted by how much it grew. The first term is selection: value reallocated toward whoever is already ahead. The second is transmission: value created inside units that already exist. This holds for any partition of any economy in any period. It is exact bookkeeping, not a behavioral model, and it carries no error term to hide behind.
Sources cited in the article section
- [8] Dynamic Olley-Pakes Productivity Decomposition with Entry and Exit ↗
- [6] The Dynamics of Productivity in the Telecommunications Equipment Industry ↗
- [7] Aggregate Productivity Growth: Lessons from Microeconomic Evidence ↗
These citations give research context. Read each source to check which claims it supports.
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