It and Beyond: The Contribution of Heterogenous Capital to Productivity

FRB of San Francisco Working Paper No. 2004-13

50 Pages Posted: 18 Oct 2004

See all articles by Daniel J. Wilson

Daniel J. Wilson

Federal Reserve Bank of San Francisco

Date Written: June 2004

Abstract

This paper explores the relationship between capital composition and productivity using a unique and remarkably detailed data set on firm-level investment in the U.S. Using cross-sectional and longitudinal regressions, I find that several capital types, including computers, communications equipment, and software, are associated with current and subsequent years' productivity. The implied marginal products are derived and compared to official data on rental prices; substantial differences exist for a number of key capital types. I also provide evidence of complementaries and substitutabilities among capital goods - a rejection of the common assumption of perfect substitutability.

Keywords: Capital heterogeneity, investment, production function, estimation

JEL Classification: D21, D24, D29

Suggested Citation

Wilson, Daniel J., It and Beyond: The Contribution of Heterogenous Capital to Productivity (June 2004). FRB of San Francisco Working Paper No. 2004-13. Available at SSRN: https://ssrn.com/abstract=605765 or http://dx.doi.org/10.2139/ssrn.605765

Daniel J. Wilson (Contact Author)

Federal Reserve Bank of San Francisco ( email )

101 Market Street
Mail Stop 1130
San Francisco, CA 94105
United States

HOME PAGE: http://www.frbsf.org/economics/economists/dwilson.html

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