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Accounting for Growth

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  • Jeremy Greenwood

    ()
    (University of Rochester)

  • Boyan Jovanovic

    (New-York University and NBER)

Abstract

A satisfactory account of the postwar growth experience of the United States should be able to come to terms with the following three facts: -Since the early 1970's there has been a slump in the advance of productivity. -The price of new equipment has fallen steadily over the postwar period. -Since the mid-1970's the skill premium has risen. Variants of Solow's (1960) vintage-capital model can go a long way toward explaining these facts, as this paper shows. In brief, the explanations are: -Productivity slowed down because the implementation of information technologies was both costly and slow. -Technological advance in the capital goods sector has lead to a decline in equipment prices. -The skill premium rose because the new, more efficient capital is complementary with skilled labor and/or because the use of skilled labor facilitates the adoption of new technologies.

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File URL: http://rcer.econ.rochester.edu/RCERPAPERS/rcer_475.pdf
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Bibliographic Info

Paper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 475.

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Length: 80 pages
Date of creation: Jul 2000
Date of revision:
Publication status: forthcoming in New Directions in Productivity Analysis, edited by Charles R. Hulten, Edwin R. Dean and Michael J. Harper. Chicago: University of Chicago Press (for NBER).
Handle: RePEc:roc:rocher:475

Contact details of provider:
Postal: University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.

Related research

Keywords: Investment-specific technological progress; vintage-capital models; learning by doing; diffusion lags.;

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References

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