Abstract: 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.
Keywords: Productivity growth, embodied technological change, equipment investment, plant, producer durable price index
Full paper (400 KB PDF)
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Last update: April 26, 2001
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