Ngai, L. Rachel and Samaniego, Roberto M.
Mapping prices into productivity in multisector growth models.
Centre for Economic Performance, London School of Economics and Political Science, London, UK.
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.
||© 2008 the authors
||Intermediate goods, investment-specific technical change, growth accounting, gross output, multisector growth models
|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
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Research centres and groups > Centre for Economic Performance (CEP)
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