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Obsolescence and Productivity

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  • Antonio R. Sampayo
  • Fernando del Río

Abstract

In this paper we argue that the increase in the obsolescence costs caused by the adoption of new information technologies, can play an important role in accounting for the productivity slowdown undergone by the US economy after 1974. We develop a standard growth model with physical and intangible capital in which technical progress is embodied in equipment. In this framework, we assume that the obsolescence of intangible capital increases when the embodied technical progress accelerates. The model is calibrated for the period 1957-1973 and the response of the economy to an increase in the rate of embodied technical progress -as observed after 1974- is simulated. We show that the increase in the obsolescence cost caused by the acceleration of embodied technical progress can account for a large part of the productivity slowdown post-1974.

Suggested Citation

  • Antonio R. Sampayo & Fernando del Río, "undated". "Obsolescence and Productivity," Working Papers 2005-25, FEDEA.
    • Handle: RePEc:fda:fdaddt:2005-25
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    References listed on IDEAS

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    Cited by:

    1. Pedro N. Rodríguez, & Simón Sosvilla-Rivero, 2006. "Understanding and Forecasting Stock Price Changes," Working Papers 2006-03, FEDEA.
    2. Andrés J. Marchante Mera & Bienvenido Ortega Aguaza & José Sánchez Maldonado, 2006. "Las dimensiones del bienestar en las Comunidades Autónomas Españolas. Un análisis de Sigma y Gamma-Convergencia," Working Papers 2006-05, FEDEA.

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    More about this item

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • 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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