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Quantifying embodied technological change

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  • Sakellaris, Plutarchos
  • Wilson, Daniel J.

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 change as 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. JEL Classification: O3, D24, L60

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Bibliographic Info

Paper provided by European Central Bank in its series Working Paper Series with number 0158.

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Date of creation: Jul 2002
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Handle: RePEc:ecb:ecbwps:20020158

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

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  1. Shea, John, 1993. "Do Supply Curves Slope Up?," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 1-32, February.
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