Capital Obsolescence, Growth Accounting and Total Factor Productivity
AbstractThe stability of capital lifespan over time is a key assumption of growth accounting studies. However, many empirical works refute this hypothesis and suggest that the average service-life of capital goods has shown a decrease in the advanced economies since the 1970s. I show in this paper that this acceleration in capital obsolescence could strongly impact on traditional measures of Total Factor Productivity. For instance, a moderate increase in the capital retirement rate since the early 1970s could explain almost all the productivity slowdown observed in the US economy in the period 1974-2000. JEL Classification: C80, E17, O47.
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Bibliographic InfoArticle provided by Presses de Sciences-Po in its journal Revue de l'OFCE.
Volume (Year): 97 bis (2006)
Issue (Month): 5 ()
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Web page: http://www.cairn.info/revue-de-l-ofce.htm
capital obsolescence; total factor productivity; productivity slowdown; mismeasurement hypothesis;
Find related papers by JEL classification:
- C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
- E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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