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Raw Materials, Profits, and the Productivity Slowdown (Rev)

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Michael Bruno
Abstract

A factor-price frontier framework is used to clarify the analogy of an increase (decrease) in raw material prices with that of autonomous technological regress (progress). Factor-price profiles estimated for the United States, the United Kingdom, Germany, and Japan bring out the major role of raw materials in the profit and product wage squeeze after 1972, with some differences between countries. The production model, in conjunction with estimates obtained from the factor-price frontier, attributes almost all the slowdown in total productivity to the rise in relative raw material prices. It is also shown that part of the apparent productivity riddle has to do with the common use of double-deflated national accounting measures of value added, which have an inherent measurement bias.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0660.

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Date of creation: Apr 1981
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Handle: RePEc:nbr:nberwo:0660

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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. Irving B. Kravis & Robert E. Lipsey, 1985. "Prices and Terms of Trade for Developed-Country Exports of Manufactured Goods," NBER Working Papers 0774, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. Griliches, Zvi, 1980. "R & D and the Productivity Slowdown," American Economic Review, American Economic Association, vol. 70(2), pages 343-48, May. [Downloadable!] (restricted)
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  3. Jeffrey D. Sachs, 1979. "Wages, Profits, and Macroeconomic Adjustment: A Comparative Study," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1979-2), pages 269-332. [Downloadable!]
  4. Bruno, Michael, 1978. "Duality, Intermediate Inputs and Value-Added," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 2, chapter 1 McMaster University Archive for the History of Economic Thought. [Downloadable!]
  5. Nadiri, M Ishaq, 1980. "Sectoral Productivity Slowdown," American Economic Review, American Economic Association, vol. 70(2), pages 349-52, May. [Downloadable!] (restricted)
  6. M. Ishaq Nadiri, 1980. "Sectoral Productivity Slowdown," NBER Working Papers 0423, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February. [Downloadable!] (restricted)
  8. Martin Feldstein & Lawrence Summers, 1977. "Is the Rate of Profit Falling?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 8(1977-1), pages 211-228. [Downloadable!]
  9. Holland, Daniel M & Myers, Stewart C, 1980. "Profitability and Capital Costs for Manufacturing Corporations and All Nonfinancial Corporations," American Economic Review, American Economic Association, vol. 70(2), pages 320-25, May. [Downloadable!] (restricted)
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  1. Zvi Griliches & Jacques Mairesse, 1982. "Comparing Productivity Growth: An Exploration of French and U.S. Industrial and Firm Data," NBER Working Papers 0961, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. 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. [Downloadable!]
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