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Measuring Productivity Growth over the 90s: Is the New Economy Still Alive?

Author

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  • Ryo Kato

    (Bank of Japan)

  • Hironori Ishizaki

    (Bank of Japan)

Abstract

This paper presents an updated estimation of the total factor productivity (TFP) of the U.S. economy following the two preceding empirical studies, Basu et al. (2001) and Burnside et al. (1995). Based on these two estimation approaches, both of which carefully handle the potential estimation bias stemming from cyclical utilization, we verified that the TFP growth in the late 90s was, to some extent, higher than that in the 80s. Further, our estimation results support the following views; (i) the effect of the higher growth of TFP on the level of output was permanent, however, (ii) the acceleration of growth rate of output was transitory in the sense that the TFP growth rates after 1999 turn out to be nearly the same as those in the 80s and early 90s.

Suggested Citation

  • Ryo Kato & Hironori Ishizaki, 2003. "Measuring Productivity Growth over the 90s: Is the New Economy Still Alive?," Bank of Japan Working Paper Series International Department,, Bank of Japan.
    • Handle: RePEc:boj:bojwps:03-e-1i
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    References listed on IDEAS

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    1. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
    2. Karl Whelan, 2002. "Computers, Obsolescence, And Productivity," The Review of Economics and Statistics, MIT Press, vol. 84(3), pages 445-461, August.
    3. Basu, Susanto & Fernald, John G. & Shapiro, Matthew D., 2001. "Productivity growth in the 1990s: technology, utilization, or adjustment?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 55(1), pages 117-165, December.
    4. Robert J. Gordon, 2003. "Hi-tech Innovation and Productivity Growth: Does Supply Create Its Own Demand?," NBER Working Papers 9437, National Bureau of Economic Research, Inc.
    5. Susanto Basu, 1996. "Procyclical Productivity: Increasing Returns or Cyclical Utilization?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 719-751.
    6. Chantal Dupasquier & Alain Guay & Pierre St-Amant, 1997. "A Comparison of Alternative Methodologies for Estimating Potential Output and the Output Gap," Staff Working Papers 97-5, Bank of Canada.
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    More about this item

    Keywords

    TFP; New Economy; capital utilization;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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