The Production-Side Approach to Estimating Embodied Technological Change

50 Pages Posted: 23 Jan 2001

See all articles by Plutarchos Sakellaris

Plutarchos Sakellaris

University of Maryland - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Daniel J. Wilson

University of Maryland - Department of Economics

Date Written: December 2000

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: technological change, production function estimation

JEL Classification: O3, D24

Suggested Citation

Sakellaris, Plutarchos and Wilson, Daniel J., The Production-Side Approach to Estimating Embodied Technological Change (December 2000). Available at SSRN: https://ssrn.com/abstract=257069 or http://dx.doi.org/10.2139/ssrn.257069

Plutarchos Sakellaris

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Daniel J. Wilson (Contact Author)

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
301-405-4636 (Phone)
301-405-3542 (Fax)

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