The Effect of Durable Goods and ICT on Euro Area Productivity Growth?

28 Pages Posted: 22 Sep 2008

See all articles by Jukka Jalava

Jukka Jalava

Pellervo Economic Research Institute

Ilja Kristian Kavonius

European Central Bank; Centre for Consumer Society Research, University of Helsinki

Date Written: September 22, 2008

Abstract

The present System of National Accounts (SNA93) treats durable consumption goods as consumption goods rather than investment although rentals for owner occupied households is imputed into GDP. We argue that households de facto treat the purchase of durable goods as investments and thus, the treatment of durables as capital assets conceptually does not differ from the present treatment of owner occupied dwellings. This is not captured by the economic analysis based on current statistical conventions. The purpose of this paper is to estimate the effect of durable goods and ICT on euro area economic growth and productivity change; when expenditure on consumer durables is recorded as capital investment. The capitalization of consumer durables impacts both the levels and growth rates of the capital stock, productivity and GDP. Our growth accounting computations demonstrated that the capital services of durables contributed one-tenth of economic growth and one-eight of labour productivity growth in 1995-2004. ICT's impacts were larger, i.e., one-fifth of GVA growth and one-sixth of labour productivity growth.

Keywords: durable good, asset, productivity, ICT, technological transformation, user cost, household production

JEL Classification: E01, E21, E22, J24, O11

Suggested Citation

Jalava, Jukka and Kavonius, Ilja Kristian, The Effect of Durable Goods and ICT on Euro Area Productivity Growth? (September 22, 2008). ECB Working Paper No. 940. Available at SSRN: https://ssrn.com/abstract=1265503

Jukka Jalava (Contact Author)

Pellervo Economic Research Institute ( email )

Eerikinkatu 28
00180 Helsinki
Finland

Ilja Kristian Kavonius

European Central Bank ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49-13448417 (Phone)

HOME PAGE: http://www.ecb.europa.eu/pub/research/authors/profiles/ilja-kristian-kavonius.en.html

Centre for Consumer Society Research, University of Helsinki ( email )

Finland

HOME PAGE: http://tuhat.helsinki.fi/portal/en/person/ikavoniu

Register to save articles to
your library

Register

Paper statistics

Downloads
37
Abstract Views
562
PlumX Metrics