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Mapping Prices into Productivity in Multisector Growth Models

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  • L. Rachel Ngai
  • Roberto M. Samaniego

Abstract

Two issues related to mapping a multi-sector model into a reduced-form value-added model are often neglected: the composition of intermediate goods, and the distinction between value added productivity and gross output productivity. We demonstrate their quantitative significance for the case of the well known model of Greenwood, Hercowitz and Krusell (1997), who find that about 60% of economic growth can be attributed to investment-specific technical change (ISTC). When we recalibrate their model to allow for even a small equipment share of intermediates, we find that ISTC accounts for almost the entirety of postwar US growth.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0869.

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Date of creation: May 2008
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Handle: RePEc:cep:cepdps:dp0869

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Intermediate goods; investment-specific technical change; growth accounting; gross output; multisector growth models;

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References

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Citations

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Cited by:
  1. Sean HOLLY & Ivan PETRELLA, 2010. "Factor demand linkages, technology shocks and the business cycle," Center for Economic Studies - Discussion papers, Katholieke Universiteit Leuven, Centrum voor Economische Studiën ces10.26, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  2. Ilyina, Anna & Samaniego, Roberto, 2012. "Structural change and financing constraints," Journal of Monetary Economics, Elsevier, Elsevier, vol. 59(2), pages 166-179.
  3. Ngai, Liwa Rachel & Samaniego, Roberto, 2009. "Mapping prices into productivity in multisector growth models," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7318, C.E.P.R. Discussion Papers.
  4. Giuseppe Berlingieri, 2013. "Outsourcing and the Rise in Services," CEP Discussion Papers dp1199, Centre for Economic Performance, LSE.
  5. Dennis Tao Yang & Xiaodong Zhu, 2009. "Modernization of Agriculture and Long-Term Growth," Working Papers tecipa-376, University of Toronto, Department of Economics.
  6. Jan Grobovsek (University of Edinburgh), 2013. "Development Accounting with Intermediate Goods," ESE Discussion Papers, Edinburgh School of Economics, University of Edinburgh 223, Edinburgh School of Economics, University of Edinburgh.
  7. Aoki, Shuhei, 2011. "A Model of Technology Transfer in Japan's Rapid Economic Growth Period," IIR Working Paper 11-05, Institute of Innovation Research, Hitotsubashi University.
  8. Evangelia Vourvachaki, 2009. "Information and Communication Technologies in a Multi-sector Endogenous Growth Model," CERGE-EI Working Papers wp386, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  9. repec:hal:wpaper:halshs-00589627 is not listed on IDEAS

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