Productivity Slowdown and Resurgence. The Role of Capital Obsolescence

Patrick Musso ()

Revue économique, 2004, vol. 55, issue 6, 1215-1239

Abstract: In a recent work, Karl Whelan [2003] argues that the hypothesis of balanced growth is firmly rejected by postwar u.s. data. There is some clear evidence that the ratio of real investment to real consumption has exhibited an upward trend since the late 1950s. In this case, the traditional one-sector model of economic growth provides a poor description of the long-run behavior of the u.s. economy. In this paper, I develop a simple two-sector model of economic growth in which the obsolescence of capital goods is endogenous. Numerical simulations of unbalanced growth paths suggest that the rapid decline in the relative price of equipment goods observed since the mid-1960s in the u.s. has shortened the average service-life of equipment, which, in turn, induced a long-lasting underestimation of the growth rate of Total Factor Productivity.

Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
http://www.cairn.info/load_pdf.php?ID_ARTICLE=RECO_556_1215 (application/pdf)
http://www.cairn.info/revue-economique-2004-6-page-1215.htm (text/html)
free

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cai:recosp:reco_556_1215

Access Statistics for this article

More articles in Revue économique from Presses de Sciences-Po
Bibliographic data for series maintained by Jean-Baptiste de Vathaire ().