Mapping prices into productivity in multisector growth models

Ngai, L. Rachel and Samaniego, Roberto M. (2008) Mapping prices into productivity in multisector growth models. CEPDP, 869. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 9780853282655

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Abstract

Two issues related to mapping a multi-sector model into a reduced-form value-added model are often neglected: the composition of intermediate goods, and the distinction between value added productivity and gross output productivity. We demonstrate their quantitative significance for the case of the well known model of Greenwood, Hercowitz and Krusell (1997), who find that about 60% of economic growth can be attributed to investment-specific technical change (ISTC). When we recalibrate their model to allow for even a small equipment share of intermediates, we find that ISTC accounts for almost the entirety of postwar US growth.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 2008 the authors
Library of Congress subject classification:	H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System:	E - Macroeconomics and Monetary Economics > E1 - General Aggregative Models > E13 - Neoclassical O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output (Income) Convergence O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O30 - General O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
Sets:	Collections > Economists Online Research centres and groups > Centre for Economic Performance (CEP) Departments > Economics
Identification Number:	869
Date Deposited:	17 Jul 2008 11:38
URL:	http://eprints.lse.ac.uk/19579/

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