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Jeremy Greenwood and Per Krusell, "growth accounting with investment-specific technological progress: a discussion of two approaches" a rejoinder

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  • Oulton, Nicholas

Abstract

The May 2007 issue of the Journal of Monetary Economics published a paper of mine entitled ‘Investment-Specific Technological Progress and Growth Accounting’ which critiqued the work of Greenwood, Hercowitz and Krusell. I argued that the Greenwood-Hercowitz-Krusell (GHK) model is a special case of a two-sector, neoclassical growth model with differing rates of technical progress in the two sectors; that a version of Jorgensonian growth accounting can be constructed for this two-sector model and hence for the GHK model; and that there is therefore a mapping between the growth accounting concepts of total factor productivity (TFP) growth in each of the two sectors, and GHK’s concepts of investment specific and neutral technological progress. The same issue of the JME published a response by Greenwood and Krusell (‘Growth Accounting with Investment-Specific Technological Progress: a Discussion of Two Approaches’). This paper is a rejoinder to theirs. It attempts to delineate both the common ground and the remaining areas of disagreement.

Suggested Citation

  • Oulton, Nicholas, 2007. "Jeremy Greenwood and Per Krusell, "growth accounting with investment-specific technological progress: a discussion of two approaches" a rejoinder," LSE Research Online Documents on Economics 19710, London School of Economics and Political Science, LSE Library.
  • Handle: RePEc:ehl:lserod:19710
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    File URL: http://eprints.lse.ac.uk/19710/
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    References listed on IDEAS

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    1. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    2. Greenwood, Jeremy & Hercowitz, Zvi & Krusell, Per, 2000. "The role of investment-specific technological change in the business cycle," European Economic Review, Elsevier, vol. 44(1), pages 91-115, January.
    3. Charles R. Hulten, 1978. "Growth Accounting with Intermediate Inputs," Review of Economic Studies, Oxford University Press, vol. 45(3), pages 511-518.
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    5. Alejandro Cuñat & Marc J. Melitz, 2012. "Volatility, Labor Market Flexibility, And The Pattern Of Comparative Advantage," Journal of the European Economic Association, European Economic Association, vol. 10(2), pages 225-254, April.
    6. Buiter, Willem H., 2007. "Seigniorage," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 1, pages 1-49.
    7. 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 342-362, June.
    8. Martin L. Weitzman, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, Oxford University Press, vol. 90(1), pages 156-162.
    9. Oulton, Nicholas, 2007. "Investment-specific technological change and growth accounting," Journal of Monetary Economics, Elsevier, vol. 54(4), pages 1290-1299, May.
    10. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1.
    11. Jorgenson, Dale W., 1966. "The Embodiment Hypothesis," Scholarly Articles 3403063, Harvard University Department of Economics.
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    13. Mark Bils, 2004. "Measuring the Growth from Better and Better Goods," NBER Working Papers 10606, National Bureau of Economic Research, Inc.
    14. Dale W. Jorgenson, 1966. "The Embodiment Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 74, pages 1-1.
    15. Hercowitz, Zvi, 1998. "The 'embodiment' controversy: A review essay," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 217-224, February.
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    Cited by:

    1. Dale W. Jorgenson & Mun S. Ho & Jon D. Samuels, 2012. "Information Technology and US Productivity Growth: Evidence from a Prototype Industry Production Account," Chapters,in: Industrial Productivity in Europe, chapter 2 Edward Elgar Publishing.
    2. Bishnu, Monisankar & Ghate, Chetan & Gopalakrishnan, Pawan, 2011. "Distortionary Taxes and Public Investment in a Model of Endogenous Investment Specific Technological Change," MPRA Paper 34111, University Library of Munich, Germany.

    More about this item

    Keywords

    Investment-specific technological change; embodiment; TFP; growth accounting;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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