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Changing technology trends, transition dynamics and growth accounting

  • Michael R. Pakko

The technology growth trends that underlie recent productivity patterns are investigated in a framework that incorporates investment-specific technological progress. Structural-break tests and regime-shifting models reveal the presence of a downward shift in TFP growth in the late 1960s and an upward shift in investment-specific technology growth in the mid-1980s. In both cases, these breaks precede observed changes in labor productivity growth by several years. Simulations of technology growth shocks in a basic neoclassical model show that induced patterns of capital accumulation are consistent with the observed lags between technological advances and changes in productivity growth.

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2000-014.

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Date of creation: 2005
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Publication status: Published in Contributions to Macroeconomics, 2005, 5(1), Article 12
Handle: RePEc:fip:fedlwp:2000-014
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