Trend breaks and the long-run implications of investment-specific technological progress

Alban Moura

Applied Economics Letters, 2023, vol. 30, issue 16, 2270-2275

Abstract: I update the Greenwood, Hercowitz, and Krusell (1997, GHK) decomposition of U.S. growth into contributions from neutral and investment-specific (IS) technological progress. I allow the decomposition to vary across sub-samples, reflecting the presence of trend breaks in the data. The estimates show strong heterogeneity across periods: while neutral technological progress explained virtually all growth between 1950 and the mid-1970s, IS technological progress accounts for 75% of growth since the 1980s. These results paint a more complex picture of postwar U.S. growth than GHK’s original decomposition and call for a better understanding of the 1970s productivity shifts.

Date: 2023
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DOI: 10.1080/13504851.2022.2096855

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