Investment-Specific Technological Change and Growth Accounting

Bank of England Working Paper No. 213

32 Pages Posted: 4 Oct 2004

See all articles by Nicholas Oulton

Nicholas Oulton

London School of Economics - Centre for Macroeconomics(CFM)

Date Written: February 2004

Abstract

Greenwood, Hercowitz and Krusell have claimed that the Jorgenson form of growth accounting is conceptually flawed and severely understates the role of technological progress embodied in new capital goods ('embodiment') in explaining US growth. To the contrary, this paper shows that in its technology aspects their model is a special case of the Jorgensonian growth-accounting model. What they call investment-specific technological change is shown to be closely related to the more familiar concept of TFP growth: statements about the one can be translated into statements about the other. Empirically, they claim that the proportion of US growth accounted for by embodiment is about twice as large as estimated by conventional growth accounting. But the difference between these estimates is found to be due more to data than to methodology.

Keywords: Investment-specific technological change, embodiment, TFP, growth accounting

JEL Classification: O47, O41, O51

Suggested Citation

Oulton, Nicholas, Investment-Specific Technological Change and Growth Accounting (February 2004). Bank of England Working Paper No. 213, Available at SSRN: https://ssrn.com/abstract=598885 or http://dx.doi.org/10.2139/ssrn.598885

Nicholas Oulton (Contact Author)

London School of Economics - Centre for Macroeconomics(CFM) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://https://ideas.repec.org/e/pou3.html

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
156
Abstract Views
1,736
rank
212,910
PlumX Metrics