Productivity Growth in the 1990s: Technology, Utilization, or Adjustment?

62 Pages Posted: 21 Jul 2001  

John G. Fernald

Federal Reserve Bank of San Francisco

Susanto Basu

Boston College, College of Arts and Sciences, Department of Economics; National Bureau of Economic Research (NBER)

Matthew D. Shapiro

University of Michigan at Ann Arbor - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: June 9, 2001

Abstract

Measured productivity growth increased substantially during the second half of the 1990s. This paper examines whether this increase owes to an increase in the rate of technological change or whether it can be explained by non-technological factors relating to factor utilization, factor accumulation, or returns to scale. It finds that the recent increase in productivity growth does appear to arise from an increase in technological change. Cyclical utilization raised measured productivity growth relative to technology growth in the first part of the expansion, but lowered it subsequently. Factor adjustment leads to a steady-state understatement of technology growth by measured productivity growth. The understatement was greater in the second half of the expansion than the first. Changes in the distribution of inputs across industries with different returns to scale lead to a modest understatement in the growth in technology. Although the increase technological change is most pronounced in durable manufacturing, technological change also increased outside of manufacturing.

JEL Classification: E22, O30, O47

Suggested Citation

Fernald, John G. and Basu, Susanto and Shapiro, Matthew D., Productivity Growth in the 1990s: Technology, Utilization, or Adjustment? (June 9, 2001). FRB of Chicago Working Paper No. 2001-04. Available at SSRN: https://ssrn.com/abstract=277248 or http://dx.doi.org/10.2139/ssrn.277248

John G. Fernald (Contact Author)

Federal Reserve Bank of San Francisco ( email )

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Susanto Basu

Boston College, College of Arts and Sciences, Department of Economics ( email )

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National Bureau of Economic Research (NBER) ( email )

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Matthew D. Shapiro

National Bureau of Economic Research (NBER) ( email )

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University of Michigan at Ann Arbor - Department of Economics ( email )

and Survey Research Center
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313-764-2769 (Fax)

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