Apply TFP multiplier to limiting inputs in set_targets()#57
Merged
jose-moran merged 3 commits intobugs/productivity-growthfrom Feb 12, 2026
Merged
Apply TFP multiplier to limiting inputs in set_targets()#57jose-moran merged 3 commits intobugs/productivity-growthfrom
jose-moran merged 3 commits intobugs/productivity-growthfrom
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Fix for production being constrained at initial levels even with TFP growth. Root cause: compute_limiting_intermediate_inputs_stock() and compute_limiting_capital_inputs_stock() calculated production limits WITHOUT applying the TFP multiplier. These limits constrain target_production, which capped actual production at initial levels regardless of TFP growth. Before fix: TFP grew 1309% but production only grew 82% (12.9% efficiency) After fix: TFP grew 843% and production grew 476% (61% efficiency) Also fix empty array handling in SimpleTFPGrowth to prevent test failures.
Collaborator
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Thank you Jose for vetting this approach. Is it necessary to also modify |
The limiting_intermediate_inputs and limiting_capital_inputs are now TFP-scaled in set_targets() (from PR #57). This removes the duplicate scaling in compute_production() to avoid applying TFP twice to the limiting stock constraint. Labour scaling is kept since it's not pre-scaled elsewhere.
Member
Author
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@sternluke sorry for that, you're right -- TFP was being taken into account twice. This is now sorted! |
Member
Author
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Will merge this into the other branch with the PR. I won't merge the other PR (since it goes into main) until I have approval from others |
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The problem was that when computing limiting inputs, we were not taking the TFP multiplier into account. This artificially limited production. The fix now includes the TFP multiplier, and we check that TFP growth does impact production growth now (see LLM generated summary below)
Fix for production being constrained at initial levels even with TFP growth.
Root cause: compute_limiting_intermediate_inputs_stock() and compute_limiting_capital_inputs_stock() calculated production limits WITHOUT applying the TFP multiplier. These limits constrain target_production, which capped actual production at initial levels regardless of TFP growth.
Before fix: TFP grew 1309% but production only grew 82% (12.9% efficiency)
After fix: TFP grew 843% and production grew 476% (61% efficiency)
Also fix empty array handling in SimpleTFPGrowth to prevent test failures.