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Interpreting productivity growth in the new economy: Some agnostic notes

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  • Gundlach, Erich

Abstract

The growth rate of total factor productivity seems to have increased recently, at least in the United States. Higher US productivity growth may justify higher stock market valuations than in the past and thus herald an emerging New Economy. However, the size of the estimated growth rate of total factor productivity depends on an assumption about the factor-augmenting properties of technological change. Simulations based on alternative properties of technological change produce a wide range of implied stock market valuations. As long as the rate of technological change cannot be observed directly, justifying the emergence of a New Economy with residual measures of total factor productivity growth will prove to be a futile exercise.

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  • Gundlach, Erich, 2001. "Interpreting productivity growth in the new economy: Some agnostic notes," Kiel Working Papers 1020, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1020
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    Cited by:

    1. Klodt, Henning, 2001. "The Essence of the New Economy," Kiel Discussion Papers 375, Kiel Institute for the World Economy (IfW Kiel).
    2. Gern, Klaus-Jürgen & Gottschalk, Jan & Kamps, Christophe & Sander, Birgit & Scheide, Joachim & Strauß, Hubert, 2001. "Deutliche Abkühlung der Weltkonjunktur," Open Access Publications from Kiel Institute for the World Economy 2572, Kiel Institute for the World Economy (IfW Kiel).
    3. Hans-Günther Vieweg & Carsten Dreher & Herbert Hofmann & Steffen Kinkel & Gunter Lay & Ulrich Schmoch, 2002. "Mechanical engineering in the age of globalisation and the New Economy," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 9, April.
    4. Piazolo, Daniel, 2001. "The New Economy and the International Regulatory Framework," Kiel Working Papers 1030, Kiel Institute for the World Economy (IfW Kiel).
    5. Klodt, Henning, 2001. "Die neue Ökonomie: Aufbruch und Umbruch," Open Access Publications from Kiel Institute for the World Economy 2575, Kiel Institute for the World Economy (IfW Kiel).
    6. Mc Quinn, Kieran, 2003. "Dynamic Factor Demands in a Changing Economy: An Irish Application," Research Technical Papers 3/RT/03, Central Bank of Ireland.

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    Keywords

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    JEL classification:

    • 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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