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Endogenous depreciation, mismeasurement of aggregate capital, and the productivity slowdown

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  • Mukoyama, Toshihiko

Abstract

When we allow capital depreciation to be endogenous, the acceleration of investment-specific technological progress can distort the measurement of the aggregate capital stock. Our quantitative exercise shows that this effect may cause a substantial bias in the measurement of total factor productivity and can account for a large portion of the observed productivity slowdown since the 1970s.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 30 (2008)
Issue (Month): 1 (March)
Pages: 513-522

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Handle: RePEc:eee:jmacro:v:30:y:2008:i:1:p:513-522

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Web page: http://www.elsevier.com/locate/inca/622617

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  1. Greenwood, J. & Hercowitz, Z. & Krusell, P., 1995. "Long-Run Implications of Investment-Specific Technological Change," UWO Department of Economics Working Papers 9510, University of Western Ontario, Department of Economics.
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  7. Gordon, Robert J., 1990. "The Measurement of Durable Goods Prices," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226304557, February.
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  9. Sakellaris, Plutarchos & Wilson, Daniel J., 2002. "Quantifying embodied technological change," Working Paper Series 0158, European Central Bank.
  10. John Laitner & Dmitriy Stolyarov, 2003. "Technological Change and the Stock Market," American Economic Review, American Economic Association, vol. 93(4), pages 1240-1267, September.
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  17. Cummins, Jason G & Violante, Giovanni L, 2002. "Investment-Specific Technical Change in the US (1947-2000): Measurement and Macroeconomic Consequences," CEPR Discussion Papers 3584, C.E.P.R. Discussion Papers.
  18. Andreas Hornstein & Per Krusell, 1996. "Can Technology Improvements Cause Productivity Slowdowns?," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 209-276 National Bureau of Economic Research, Inc.
  19. Charles R. Hulten, 1992. "Growth Accounting When Technical Change is Embodied in Capital," NBER Working Papers 3971, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Gaowang Wang & Heng-fu Zou, 2010. "Multiple Equilibria and Indeterminacy in an Optimal Growth Model with Endogenous Capital Depreciation," CEMA Working Papers 392, China Economics and Management Academy, Central University of Finance and Economics.
  2. Nicholas Apergis & John Sorros, 2013. "The role of fixed capital depreciations for TFP growth: evidence from firm level panel data estimates," Journal of Economics and Finance, Springer, vol. 37(4), pages 606-621, October.
  3. Ilmakunnas, Pekka & Miyakoshi, Tatsuyoshi, 2013. "What are the drivers of TFP in the Aging Economy? Aging labor and ICT capital," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 201-211.
  4. Tatsuyoshi Miyakoshi & Pekka Ilmakunnas, 2009. "What decreases the TFP ? The aging labor and ICT imbalance," Discussion Papers in Economics and Business 09-03, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).

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