Accounting for Growth

Jeremy Greenwood () and Boyan Jovanovic ()

No 475, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: A satisfactory account of the postwar growth experience of the United States should be able to come to terms with the following three facts: -Since the early 1970's there has been a slump in the advance of productivity. -The price of new equipment has fallen steadily over the postwar period. -Since the mid-1970's the skill premium has risen. Variants of Solow's (1960) vintage-capital model can go a long way toward explaining these facts, as this paper shows. In brief, the explanations are:

-Productivity slowed down because the implementation of information technologies was both costly and slow. -Technological advance in the capital goods sector has lead to a decline in equipment prices. -The skill premium rose because the new, more efficient capital is complementary with skilled labor and/or because the use of skilled labor facilitates the adoption of new technologies.

Keywords: Investment-specific technological progress; vintage-capital models; learning by doing; diffusion lags. (search for similar items in EconPapers)
JEL-codes: O3 O4 (search for similar items in EconPapers)
Date: 2000-07
View list of references View citations in EconPapers

Forthcoming in New Directions in Productivity Analysis, edited by Charles R. Hulten, Edwin R. Dean and Michael J. Harper. Chicago: University of Chicago Press (for NBER).

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Related works:
Chapter: Accounting for Growth (2001)
Working Paper: Accounting for Growth (1998)
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