Using Investment Data to Assess the Importance of Price Mismeasurement

Diego Comin ()

Macroeconomics from EconWPA

Abstract: This paper presents a new approach to assess the role of price mismeasurement in the productivity slowdown. I invert the firm's investment decision to identify the embodied and disembodied components of productivity growth. With a Cobb-Douglas production function, output price mismeasurement only should affect the latter. Contrary to the mismeasurement hypothesis, I find that in the Post-War period, disembodied productivity grew faster in the hard-to-measure than in the non-manufacturing easy-to-measure sectors, and that disembodied productivity slowed down less in the hard-to-measure than in the easy- to-measure sectors since the 70's. These results hold a fortiori when capital and labor are complements.

Keywords: price mismeasurement; productivity slowdown; embodied and disembodied productivity (search for similar items in EconPapers)
JEL-codes: C6 D9 E2 (search for similar items in EconPapers)
Date: 2003-06-09
Note: Type of Document - acrobat pdf; prepared on IBM PC ; to print on HP; pages: 38; figures: included
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http://129.3.20.41/eps/mac/papers/0306/0306006.pdf (application/pdf)

Related works:
Working Paper: Using Investment Data to Assess the Importance of Price Mismeasurement (2002)
Working Paper: Using Investment Data to Assess the Importance of Price Mismeasurement (2004)
Journal Article: Using Investment Data to Assess the Importance of Price Mismeasurement (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0306006

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