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Projecting productivity growth: lessons from the U.S. growth resurgence

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Author Info
Dale W. Jorgenson
Mun S. Ho
Kevin J. Stiroh

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Abstract

Following the 1995-2000 period of more rapid output growth and lower inflation in the United States, economists have strenuously debated whether improvements in economic performance can be sustained. The recession that began in March 2001 intensified the debate, and the economic impacts of the events of September 11 have yet to be fully understood. Both factors add to the considerable uncertainties about future growth that currently face decision makers in both the public and private sectors. ; In this article, the authors analyze the sources of U.S. labor productivity growth in the post-1995 period and present projections for both output and labor productivity growth for the next decade. Despite the 2001 downward revisions to U.S. gross domestic product and software investment, the authors show that information technology (IT) played a substantial role in the U.S. productivity revival. The article then outlines a methodology for projecting trend output and productivity growth. The base-case projection puts the rate of trend productivity growth at 2.21 percent per year over the next decade with a range of 1.33 to 2.92 percent, reflecting fundamental uncertainties about the rate of technological progress in IT-production and investment patterns. The central projection is only slightly below the average growth rate of 2.36 percent during the 1995-2000 period.

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Publisher Info
Article provided by Federal Reserve Bank of Atlanta in its journal Economic Review.

Volume (Year): (2002)
Issue (Month): Q3 ()
Pages: 1-13
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Handle: RePEc:fip:fedaer:y:2002:i:q3:p:1-13:n:v.87no.3

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Related research
Keywords: Productivity ; Technology ; Economic development;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. John Roberts, 2001. "Estimates of the Productivity Trend Using Time-Varying Parameter Techniques," Contributions to Macroeconomics, Berkeley Electronic Press, vol. 1(contribut), pages 1014-1014. [Downloadable!] (restricted)
  2. Gordon, Robert J, 2000. "Does the 'New Economy' Measure up to the Great Inventions of the Past?," CEPR Discussion Papers 2607, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  3. Ana Aizcorbe, 2002. "Why are semiconductor prices falling so fast? Industry estimates and implications for productivity measurement," Finance and Economics Discussion Series 2002-20, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  4. Martin Neil Baily, 2001. "Macroeconomic implications of the new economy," Proceedings, Federal Reserve Bank of Kansas City, pages 201-268. [Downloadable!]
  5. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: U.S. Economic Growth in the Information Age," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2000-1), pages 125-236. [Downloadable!]
    Other versions:
  6. Martin Neil Baily, 2001. "Macroeconomic Implications of the New Economy," Peterson Institute Working Paper Series WP01-9, Peterson Institute for International Economics. [Downloadable!]
  7. Mark W. French, 2001. "Estimating changes in trend growth of total factor productivity: Kalman and H-P filters versus a Markov-switching framework," Finance and Economics Discussion Series 2001-44, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  8. John M. Roberts, 2001. "Estimates of the productivity trend using time-varying parameter techniques," Finance and Economics Discussion Series 2001-08, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  9. Bruce E. Hansen, 2001. "The New Econometrics of Structural Change: Dating Breaks in U.S. Labour Productivity," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 117-128, Fall. [Downloadable!] (restricted)
  10. Bart Hobijn, 2001. "Is equipment price deflation a statistical artifact?," Staff Reports 139, Federal Reserve Bank of New York. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Urban Jermann & Vincenzo Quadrini, 2002. "Stock Market Boom and the Productivity Gains of the 1990s," NBER Working Papers 9034, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Ana Aizcorbe & Samuel Kortum, 2004. "Moore's Law and the Semiconductor Industry: A Vintage Model," BEA Working Papers 0019, Bureau of Economic Analysis. [Downloadable!]
    Other versions:
  3. Leonardo Becchetti & Fabrizio Adriani, 2003. "Does the Digital Divide Matter? The Role of Information and Communication Technology in Cross-country Level and Growth Estimates?," CEIS Research Paper 4, Tor Vergata University, CEIS. [Downloadable!]
  4. Carol Corrado & Charles Hulten & Daniel Sichel, 2006. "Intangible capital and economic growth," Finance and Economics Discussion Series 2006-24, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  5. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2007. "A retrospective look at the U.S. productivity growth resurgence," Staff Reports 277, Federal Reserve Bank of New York. [Downloadable!]
    Other versions:
  6. Alan Hughes & Michael S Scott Morton, 2005. "ICT and productivity growth - the paradox resolved?," ESRC Centre for Business Research - Working Papers wp316, ESRC Centre for Business Research. [Downloadable!]
  7. Kevin J. Stiroh, 2006. "Volatility accounting: a production perspective on increased economic stability," Staff Reports 245, Federal Reserve Bank of New York. [Downloadable!]
  8. Jordan Rappaport, 2004. "A simple model of city crowdedness," Research Working Paper RWP 04-12, Federal Reserve Bank of Kansas City. [Downloadable!]
  9. Benoît Robidoux & Bing-Sun Wong, 2003. "Has Trend Productivity Growth Increased in Canada?," International Productivity Monitor, Centre for the Study of Living Standards, vol. 6, pages 47-55, Spring. [Downloadable!]
  10. Stephen D. Oliner & Daniel E. Sichel, 2002. "Information technology and productivity: where are we now and where are we going?," Economic Review, Federal Reserve Bank of Atlanta, issue Q3, pages 15-44. [Downloadable!]
    Other versions:
  11. Gilbert Cette & Christian Pfister, 2004. "Challenges of the “New Economy” for Monetary Policy," International Productivity Monitor, Centre for the Study of Living Standards, vol. 8, pages 27-36, Spring. [Downloadable!]
  12. Stephen D. Oliner & Daniel E. Sichel. & Kevin J. Stiroh, 2007. "Explaining a productive decade," Finance and Economics Discussion Series 2007-63, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  13. Fernando Lera & Margarita Billón, 2004. "The North-South Digital Divide in Information and Communication Technologies Development: the Case for Spanish Regions," ERSA conference papers ersa04p307, European Regional Science Association. [Downloadable!]
  14. Dale Jorgenson & Mun Ho & Kevin Stiroh, 2003. "Growth of US Industries and Investments in Information Technology and Higher Education," Economic Systems Research, Taylor and Francis Journals, vol. 15(3), pages 279-325, September. [Downloadable!] (restricted)
    Other versions:
  15. Martin Neil Baily, 2002. "Distinguished Lecture on Economics in Government: The New Economy: Post Mortem or Second Wind?," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 3-22, Spring. [Downloadable!] (restricted)
  16. Hélène Baudchon, 2002. "The Aftermath of the "New Economy" Bust : a Case Study of Five OECD Countries," Documents de Travail de l'OFCE 2002-08, Observatoire Francais des Conjonctures Economiques (OFCE). [Downloadable!]
  17. Graciela Chichilnisky & Olga Gorbachev, 2004. "Volatility in the knowledge economy," Discussion Papers 0304-13, Columbia University, Department of Economics. [Downloadable!]
    Other versions:
  18. Jukka Jalava, 2002. "The Production and Use of ICT in Finland," Discussion Papers 827, The Research Institute of the Finnish Economy. [Downloadable!]
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