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Explaining a Productive Decade

Author

Listed:
  • Stephen D. Oliner

    (Board of Governors of the Federal Reserve Board)

  • Daniel E. Sichel

    (Board of Governors of the Federal Reserve Board)

  • Kevin J. Stiroh

    (Board of Governors of the Federal Reserve Board)

Abstract

This paper analyzes the sources of recent U.S. productivity growth using both aggregate and industry-level data. The paper confirms the central role of information technology in the productivity revival during 1995-2000 and shows that it played a significant, although smaller, role after 2000. Productivity growth after 2000 appears to have been boosted by industry restructuring and cost cutting in response to profit pressures, an unlikely source of future strength. In addition, the incorporation of intangible capital into the growth accounting framework somewhat diminishes estimates of labor productivity's performance since 2000 and makes the gain during 1995-2000 look larger than in the official data. Finally, the paper examines the outlook for trend growth in labor productivity; the resulting estimate, which is subject to much uncertainty, is centered at 2 1/4 percent a year, faster than the lackluster pace that prevailed before 1995 but somewhat slower than the 1995-2000 average.

Suggested Citation

  • Stephen D. Oliner & Daniel E. Sichel & Kevin J. Stiroh, 2007. "Explaining a Productive Decade," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 38(1), pages 81-152.
  • Handle: RePEc:bin:bpeajo:v:38:y:2007:i:2007-1:p:81-152
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    More about this item

    Keywords

    macroeconomics; productivity growth; labor productivity;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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