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Investment-specific technological change and growth accounting

Oulton, Nicholas (2007) Investment-specific technological change and growth accounting. Journal of Monetary Economics, 54 (4). pp. 1290-1299. ISSN 0304-3932

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Identification Number: 10.1016/j.jmoneco.2006.02.004


Greenwood et al. [1997. Long-run implications of investment-specific technological change. American Economic Review 87(3), 342–362; and 2000. The role of investment-specific technological change in the business cycle. European Economic Review 44, 91–115] and Hercowitz [1998. The ‘embodiment’ controversy: a review essay. Journal of Monetary Economics 41, 217–224] have claimed that the Jorgenson form of growth accounting is conceptually flawed and severely understates the importance of technological progress embodied in new capital goods for explaining 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 total factor productivity (TFP) growth: statements about the one can be translated into statements about the other. Empirically, differences between their conclusions and those of growth accounting studies about the extent to which embodiment explains US economic growth are found to relate more to data than to methodology.

Item Type: Article
Official URL:
Additional Information: © 2006 Bank of England
Subjects: H Social Sciences > HB Economic Theory
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 21 Mar 2013 13:34
Last Modified: 21 Mar 2013 13:34

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