Quantifying Embodied Technological Change
50 Pages Posted: 14 May 2003
Date Written: July 2002
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: productivity growth, embodied technological change, equipment investment, plant, producer durable price index
JEL Classification: O3, D24, L60
Suggested Citation: Suggested Citation