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The Production-Side Approach to Estimating Embodied Technological Change

  • Plutarchos Sakellaris

    ()

    (University of Maryland, University of Ioannina, and Federal Reserve Board)

  • Dan Wilson

    ()

    (University of Maryland)

We estimate the rate of embodied technological change directly from plant-level manufacturing data on current output and input choices along with histories on their vintages of equipment investment. Our estimates range between 8 and 17 percent for the typical U.S. manufacturing plant during the years 1972-1996. Any number in this range is substantially larger than is conventionally accepted with some important implications. First, the role of investment- specific technological change as an engine of growth is even larger than previously estimated. Second, existing producer durable price indices do not adequately account for quality change. As a result, measured capital stock growth is biased. Third, if accurate, the Hulten and Wykoff (1981) economic depreciation rates may primarily reflect obsolescence.

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Paper provided by University of Maryland, Department of Economics in its series Electronic Working Papers with number 00-002.

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Date of creation: Dec 2000
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Handle: RePEc:umd:umdeco:00-002
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Department of Economics, University of Maryland, Tydings Hall, College Park, MD 20742

Web page: http://www.econ.umd.edu/

Order Information: Postal: Department of Economics, University of Maryland, Tydings Hall, College Park, MD 20742
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