Using Investment Data to Assess the Importance of Price Mismeasurement

39 Pages Posted: 4 Aug 2004 Last revised: 17 Jul 2010

See all articles by Diego Comin

Diego Comin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: July 2004

Abstract

This paper presents a new approach to assess the role of price mismeasurement in the productivity slowdown. I invert the firm's investment decision to identify the embodied and disembodied components of productivity growth. With a Cobb-Douglas production function, output price mismeasurement only should affect the latter. Contrary to the mismeasurement hypothesis, I find that in the Post-War period, disembodied productivity grew faster in the hard-to-measure than in the non-manufacturing easy-to-measure sectors, and that disembodied productivity slowed down less in the hard-to-measure than in the easy-to-measure sectors since the 70's. These results hold a fortiori when capital and labor are complements.

Suggested Citation

Comin, Diego, Using Investment Data to Assess the Importance of Price Mismeasurement (July 2004). NBER Working Paper No. w10627, Available at SSRN: https://ssrn.com/abstract=565826

Diego Comin (Contact Author)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
22
Abstract Views
667
PlumX Metrics