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Effects of Terms of Trade Gains and Tariff Changes on the Measurement of US Productivity Growth

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  • Robert C. Feenstra
  • Benjamin R. Mandel
  • Marshall B. Reinsdorf
  • Matthew J. Slaughter

Abstract

The acceleration in US productivity growth since 1995 is often attributed to declining prices for information technology (IT ) goods, and therefore enhanced productivity growth in that sector. We investigate an alternative explanation for these IT price movements: gains in the US terms of trade and tariff reductions, especially for IT products, which led to greater gains than shown by official indexes. We do not, however, investigate the indexes used to deflate the domestic absorption components of GDP, and if upward biases are present in those indexes that could offset some of the effects of mismeasured export and import indexes. (JEL C43, E23, F13, F14, J24)

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 5 (2013)
Issue (Month): 1 (February)
Pages: 59-93

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Handle: RePEc:aea:aejpol:v:5:y:2013:i:1:p:59-93

Note: DOI: 10.1257/pol.5.1.59
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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Trade-Induced Bias in Productivity Measurement
    by Agent Continuum in Agent Continuum on 2010-01-12 14:00:20
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Cited by:
  1. Robert C. Feenstra & Robert E. Lipsey & Lee G. Branstetter & C. Fritz Foley & James Harrigan & J. Bradford Jensen & Lori Kletzer & Catherine Mann & Peter K. Schott & Greg C. Wright, 2010. "Report on the State of Available Data for the Study of International Trade and Foreign Direct Investment," NBER Working Papers 16254, National Bureau of Economic Research, Inc.
  2. David Byrne & Brian K. Kovak & Ryan Michaels, 2013. "Price and Quality Dispersion in an Offshoring Market: Evidence from Semiconductor Production Services," NBER Working Papers 19637, National Bureau of Economic Research, Inc.
  3. Llosa, Luis-Gonzalo, 2013. "How Do Terms of Trade Affect Productivity? The Role of Monopolistic Output Markets," Working Papers 2013-007, Banco Central de Reserva del PerĂº.
  4. Susan Houseman & Christopher Kurz & Paul Lengermann & Benjamin Mandel, 2010. "Offshoring bias in U.S. manufacturing: implications for productivity and value added," International Finance Discussion Papers 1007, Board of Governors of the Federal Reserve System (U.S.).
  5. Susan Houseman & Christopher Kurz & Paul Lengermann & Benjamin Mandel, 2011. "Offshoring Bias in U.S. Manufacturing," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 111-32, Spring.
  6. Timothy J. Kehoe & Kim J. Ruhl, 2010. "Why have economic reforms in Mexico not generated growth?," Staff Report 453, Federal Reserve Bank of Minneapolis.
  7. Gita Gopinath & Brent Neiman, 2011. "Trade adjustment and productivity in large crises," Working Papers 11-9, Federal Reserve Bank of Boston.
  8. Elizabeth Brainerd & Nidhiya Menon, 2013. "Seasonal Effects of Water Quality: The Hidden Costs of the Green Revolution to Infant and Child Health in India," Working Papers 64, Brandeis University, Department of Economics and International Businesss School.
  9. Catherine L. Mann, 2012. "Information Technology Intensity, Diffusion, and Job Creation," Working Papers 46, Brandeis University, Department of Economics and International Businesss School.

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