Growth Accounting When Technical Change Is Embodied in Capital

Charles R Hulten

American Economic Review, 1992, vol. 82, issue 4, 964-80

Abstract: This paper revisits the hypothesis that technical change is embodied in capital. It extends old results to make them more relevant to the contemporary debates about the adjustment of investment goods for quality change and about the role of embodied technical change as a source of economic growth. It is shown that the failure to adjust capital for quality change has the effect of suppressing the quality effects into the conventional total-factor-productivity residual and it is found that approximately 20 percent of the residual growth of quality-adjusted.output could be attributed to embodied technical change. Copyright 1992 by American Economic Association.

Date: 1992
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