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Productivity growth in Australian manufacturing: a vintage capital model


  • Bloch, Harry
  • Madden, Gary G


Recent contributions by Hulten (1992) and Gort et al. (1993) indicate a renewed interest in using capital-embodied technology models to understand the sources of productivity growth. An advantage of models with capital-embodied technology is that current productivity is related to the prior time path of investment. This provides a potential dynamic link between past market conditions and current productivity performance. In particular, models with capital-embodied technology provide a possible explanation for the positive relationship between productivity growth and the rate of investment, particularly investment in capital equipment, found in cross-country studies (see, for example, Wolff (1991) and De Long and Summers (1992)). Regressions in the form of the relationships derived from the analysis are estimated using data for a cross-section of Australian manufacturing industries. Variables suggested by the analysis of the vintage capital model contribute significantly to the explanation of differences in average labour productivity growth across the sample industries. However, specific restrictions on coefficient values derived from the analysis are rejected by the regression results. The implications of this mixed support for the application of the vintage capital model to explaining labour productivity growth in Australian manufacturing are discussed

Suggested Citation

  • Bloch, Harry & Madden, Gary G, 1995. "Productivity growth in Australian manufacturing: a vintage capital model," MPRA Paper 13003, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:13003

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    References listed on IDEAS

    1. J. Bradford DeLong & Lawrence H. Summers, 1992. "Equipment Investment and Economic Growth: How Strong Is the Nexus?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(2), pages 157-212.
    2. McHugh, Richard & Lane, Julia, 1987. "The Age of Capital, the Age of Utilized Capital, and Tests of the Embodiment Hypothesis," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 362-367, May.
    3. Wolff, Edward N, 1991. "Capital Formation and Productivity Convergence over the Long Term," American Economic Review, American Economic Association, vol. 81(3), pages 565-579, June.
    4. Hulten, Charles R, 1992. "Growth Accounting When Technical Change Is Embodied in Capital," American Economic Review, American Economic Association, vol. 82(4), pages 964-980, September.
    5. Intriligator, Michael D, 1992. " Productivity and the Embodiment of Technical Progress," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages 75-87, Supplemen.
    6. Charles R. Hulten, 1992. "Growth Accounting When Technical Change is Embodied in Capital," NBER Working Papers 3971, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Neil Dias Karunaratne, 2007. "Microeconomic Reform and Technical Efficiency in Australian Manufacturing," Discussion Papers Series 345, School of Economics, University of Queensland, Australia.

    More about this item


    Australian manufacturing; productivity growth;

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity


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