Mapping Prices into Productivity in Multisector Growth Models

30 Pages Posted: 15 Jul 2009

See all articles by Rachel Ngai

Rachel Ngai

London School of Economics & Political Science (LSE) - Department of Economics; Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management

Roberto M. Samaniego

George Washington University - Department of Economics

Date Written: June 2009

Abstract

Two issues related to mapping a multi-sector model into a reduced-form value-added model are often neglected: the composition of intermediate goods, and the distinction between the productivity indices for value added and for gross output. We illustrate their significance for growth accounting using the well known model of Greenwood, Hercowitz and Krusell (1997), who find that about 60% of economic growth can be attributed to investment-specific technical change (ISTC). When we recalibrate their model to account for the composition of intermediates, we find that ISTC accounts for an even greater share of post-war US growth.

Keywords: growth accounting, Intermediate goods, investment-specific technical change, multisector growth models, value added

JEL Classification: E13, O30, O41, O47

Suggested Citation

Ngai, Liwa Rachel and Samaniego, Roberto M., Mapping Prices into Productivity in Multisector Growth Models (June 2009). CEPR Discussion Paper No. DP7318. Available at SSRN: https://ssrn.com/abstract=1433914

Liwa Rachel Ngai (Contact Author)

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 207 955 7017 (Phone)
+44 207 831 1840 (Fax)

Hong Kong University of Science & Technology (HKUST) - HKUST School of Business and Management ( email )

Clear Water Bay
Kowloon
Hong Kong

Roberto M. Samaniego

George Washington University - Department of Economics ( email )

2115 G St NW Suite 340
Washington, DC 20052
United States

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