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Quantifying Embodied Technological Change

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Author Info

  • Plutarchos Sakellaris

    (University of Maryland and AUEB)

  • Daniel J. Wilson

    (Federal Reserve Bank of San Francisco)

Abstract

We estimate the rate of embodied technological change directly from plant-level manufacturing data on current output and input choices along with histories on their vintages of equipment investment. Our estimates range between 8 and 17 percent for the typical U.S. manufacturing plant during the years 1972-1996. Any number in this range is substantially larger than is conventionally accepted with some important implications. First, the role of investment-specific technological changeas an engine of growth is even larger than previously estimated. Second, existing producer durable price indices do not adequately account for quality change. As a result, measured capital stock growth is biased. Third, if accurate, the Hulten and Wykoff (1981) economic depreciation rates may primarily reflect obsolescence. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1016/S1094-2025(03)00052-8
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Bibliographic Info

Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 7 (2004)
Issue (Month): 1 (January)
Pages: 1-26

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Handle: RePEc:red:issued:v:7:y:2004:i:1:p:1-26

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Related research

Keywords: productivity growth; embodied technological change; equipment investment; plant; producer durable price index.;

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  1. Shea, J., 1991. "Do Supply Curves Slope Up?," Working papers 9116, Wisconsin Madison - Social Systems.
  2. Plutarchos Sakellaris, 2000. "Patterns of Plant Adjustment," Electronic Working Papers 00-001, University of Maryland, Department of Economics.
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  4. Susanto Basu & John Fernald, 2001. "Why Is Productivity Procyclical? Why Do We Care?," NBER Chapters, in: New Developments in Productivity Analysis, pages 225-302 National Bureau of Economic Research, Inc.
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    • Jeremy Greenwood & Boyan Jovanovic, 2001. "Accounting for Growth," NBER Chapters, in: New Developments in Productivity Analysis, pages 179-224 National Bureau of Economic Research, Inc.
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