Productivity growth in Australian manufacturing: a vintage capital model
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
|Date of creation:||1995|
|Date of revision:|
|Publication status:||Published in International Journal of Manpower 1.16(1995): pp. 22-31|
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- Intriligator, Michael D, 1992. " Productivity and the Embodiment of Technical Progress," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S75-87, Supplemen.
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The Review of Economics and Statistics,
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- Richard McHugh & Julia Lane, 1986. "The age of capital, the age of utilized capital, and tests of the embodiment hypothesis," Working Papers 86-4, Federal Reserve Bank of Philadelphia.
- 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.
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