Solow residual

The Solow residual is a measure of empirical productivity growth in an economy over time, representing the part of output growth that is not accounted for by measured increases in capital accumulation or labor input. It was defined by Nobel Prize winning economist Robert Solow, who described rising productivity as output rising faster than growth in the measured capital and labor inputs, so that the leftover, unexplained portion of growth is attributed to factors such as technological improvement, innovation, and efficiency gains. The measure is now more commonly referred to as multifactor productivity or total factor productivity, though the original 1957 work by Solow did not use those terms, and it is described as procyclical and almost always positive in peacetime capitalist economies. This description is adapted from Wikipedia contributors under CC BY-SA 4.0; changes were made. https://creativecommons.org/licenses/by-sa/4.0/