Accounting for Growth

56 Pages Posted: 18 Oct 1998 Last revised: 10 Oct 2010

See all articles by Jeremy Greenwood

Jeremy Greenwood

University of Pennsylvania - Department of Economics; National Bureau of Economic Research (NBER)

Boyan Jovanovic

New York University - Department of Economics

Date Written: July 1998

Abstract

A satisfactory account of the postwar growth experience of the United States should be able to come to terms with the following three facts: 1. Since the early 1970's there has been a slump in the advance of productivity. 2. The price of new equipment has fallen steadily over the postwar period. 3. Since the mid-1970's the skill premium has risen. Variants of Solow's (1960) vintage-capital model can go a long way toward explaining these facts, as this paper shows. In brief, the explanations are: 1. Productivity slowed down because the implementation of information technologies was both costly and slow. 2. Technological advance in the capital goods sector has lead to a decline in equipment prices. 3. The skill premium rose because the new, more efficient capital is complementary with skilled labor and/or because the use of skilled labor facilitates the adoption of new technologies.

Suggested Citation

Greenwood, Jeremy and Jovanovic, Boyan, Accounting for Growth (July 1998). NBER Working Paper No. w6647. Available at SSRN: https://ssrn.com/abstract=119689

Jeremy Greenwood (Contact Author)

University of Pennsylvania - Department of Economics ( email )

Ronald O. Perelman Center for Political Science
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HOME PAGE: http://jeremygreenwood.net

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
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Boyan Jovanovic

New York University - Department of Economics ( email )

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New York, NY 10012
United States

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