Does social capital explain the Solow residual? A DSGE approach

Social capital plays a role in many desirable economic outcomes. We analyze how these beneficial effects translate into the performance of economies by developing dynamic stochastic general equilibrium (DSGE) model featuring social explaining Solow residual. then simulate and estimate with Bayesian techniques using Italian data. Our framework fits actual data better than standard DSGE model, suggesting that may improve via its impact on total factor productivity. Including human further raises capital’s ability to explain