Capital quality improvement and the sources of growth in the euro area
Capital quality improvement is a general phenomenon. Therefore quality correction is needed in price indexes. There is substantial evidence of biases in the official price indexes of capital equipment. We apply to euro area statistics estimates of these biases based on US data thus deriving quality-adjusted price indexes. Adjusted for quality, productive capital stocks of equipment and software grow on average 3 percentage points faster annually - a doubling of their growth rates. Quality-adjusted output grows 0.46 percentage points faster annually - a 20 percent increase. In terms of growth accounting, quality adjustment subtracts 11 percentage points from the share of TFP in aggregate growth and adds them to the share of equipment stock. For the 1990s only the difference is even higher: 14 percentage points. When all is told, embodied technological change accounts for 46 percent of (quality-adjusted) output growth in the euro area over the period 1982 to 2000. JEL Classification: O3, O47, D24, E22
|Date of creation:||Jun 2004|
|Date of revision:|
|Contact details of provider:|| Postal: 60640 Frankfurt am Main, Germany|
Phone: +49 69 1344 0
Fax: +49 69 1344 6000
Web page: http://www.ecb.europa.eu/
More information through EDIRC
References listed on IDEAS
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.:
- Francesco Daveri, .
"Is Growth an Information Technology Story in Europe Too?,"
EPRU Working Paper Series
00-12, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Francesco Daveri, . "Is growth an information technology story in Europe too?," Working Papers 168, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Karl Whelan, 2000.
"Computers, obsolescence, and productivity,"
Open Access publications
10197/244, School of Economics, University College Dublin.
- Karl Whelan, 2002. "Computers, obsolescence, and productivity," Open Access publications 10197/204, School of Economics, University College Dublin.
- Karl Whelan, 2000. "Computers, obsolescence, and productivity," Finance and Economics Discussion Series 2000-06, Board of Governors of the Federal Reserve System (U.S.).
- Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1, September.
- repec:ucp:bknber:9780226304557 is not listed on IDEAS
- Bahk, Byong-Hong & Gort, Michael, 1993. "Decomposing Learning by Doing in New Plants," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 561-83, August.
- Van Ark, Bart, 1996. "Issues in Measurement and International Comparison of Productivity - An Overview," GGDC Research Memorandum 199628, Groningen Growth and Development Centre, University of Groningen.
- R. E. Hall, 1968. "Technical Change and Capital from the Point of View of the Dual," Review of Economic Studies, Oxford University Press, vol. 35(1), pages 35-46.
- Whelan, Karl, 2002. "A Guide to U.S. Chain Aggregated NIPA Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(2), pages 217-33, June.
- Greenwood, J. & Hercowitz, Z. & Krusell, P., 1995.
"Long-Run Implications of Investment-Specific Technological Change,"
UWO Department of Economics Working Papers
9510, University of Western Ontario, Department of Economics.
- Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 1997. "Long-Run Implications of Investment-Specific Technological Change," American Economic Review, American Economic Association, vol. 87(3), pages 342-62, June.
- Greenwood, J. & Hercowitz, Z. & Krusell, P., 1996. "Long-Run Implications of Investment-Specific Technological Change," RCER Working Papers 420, University of Rochester - Center for Economic Research (RCER).
- 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.
- D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
- repec:dgr:rugggd:199628 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:ecb:ecbwps:20040368. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Official Publications)
If references are entirely missing, you can add them using this form.