Productivity Growth and the New Economy

William D. Nordhaus ()

No 1284, Cowles Foundation Discussion Papers from Cowles Foundation, Yale University

Abstract: The present study is the third in a series of three papers devoted to issues in the measurement of productivity and productivity growth. The major findings are as follows. First, this study shows that the new data set used here, which develops data on total output, business sector output, and "well-measured" output, and relying on income-side data, provides a useful supplement to existing data sets. Second, there has clearly been a rebound in labor-productivity growth in recent years. All three sectoral definitions show a major acceleration in labor productivity in the last three years of the period (1996-98) relative to the 1978-95 period. The rebound was 1.2 percentage points for GDP, 1.8 percentage points for business sector, and 2.1 percentage points for well-measured output. Third, productivity growth in the new economy sectors has made a significant contribution to economy-wide productivity growth. For the business sector, of the 1.82 percentage point increase in labor-productivity growth in the last three years, 0.65 percentage point was due to the new-economy sectors. Finally, for all three output measures, there has been a substantial upturn in labor-productivity growth outside the new economy. After removing the direct effect of new economy sectors, the productivity acceleration was 0.54 percentage points for total GDP, 0.65 percentage points for business output, and 1.18 percentage points for well- measured output. It is clear that the productivity rebound is not narrowly focused in a few new-economy sectors.

Keywords: Productivity; new economy; well-measured output (search for similar items in EconPapers)
JEL-codes: E3 D24 C82 O3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev, nep-eff, nep-lam and nep-tid
Date: Written
Note: CFP 1064.
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Published in Brookings Papers on Economic Activities (2002), 2: 211-265

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Related works:
Working Paper: Productivity Growth and the New Economy (2001)
Journal Article: Productivity Growth and the New Economy (2002)
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