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Shifting Trends in Semiconductor Prices and the Pace of Technological Progress

  • Ana Aizcorbe

    ()

    (Department of Economics, Bureau of Economic Analysis, Washington, DC, 20230, USA.)

  • Stephen D Oliner

    ()

    (Division of Research and Statistics, Federal Reserve Board, Washington, DC, 20551, USA.)

  • Daniel E Sichel

    ()

    (Division of Research and Statistics, Federal Reserve Board, Washington, DC, 20551, USA.)

This paper examines three questions motivated by previous research on semiconductors and productivity growth: Why did semiconductor prices fall so rapidly in the second half of the 1990s? Why has the rate of price decline slowed since 2001? And to what extent are these price swings associated with changes in the rate of advance in semiconductor technology? We show that the price swings are statistically significant and that they reflect changes in both price-cost markups and cost trends. Further analysis indicates that the shift to faster cost declines in the mid-1990s likely corresponded to a speed-up in the pace of advance in semiconductor technology. However, the slower cost declines since 2001 appear not to have been mirrored by a deceleration in technology. Consequently, researchers should be cautious about associating price or cost movements for semiconductors with changes in the pace of underlying technology even over moderately long periods.Business Economics (2008) 43, 23–39; doi:10.2145/20080303

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Article provided by Palgrave Macmillan in its journal Business Economics.

Volume (Year): 43 (2008)
Issue (Month): 3 (July)
Pages: 23-39

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Handle: RePEc:pal:buseco:v:43:y:2008:i:3:p:23-39
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  1. Ana Aizcorbe & Samuel Kortum, 2004. "Moore's Law and the Semiconductor Industry: A Vintage Model," Industrial Organization 0412008, EconWPA.
  2. Perron, P. & Bai, J., 1995. "Estimating and Testing Linear Models with Multiple Structural Changes," Cahiers de recherche 9552, Universite de Montreal, Departement de sciences economiques.
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