The Impact of Plant-Level Resource Reallocations and Technical Progress on U.S. Macroeconomic Growth

Amil Petrin, T. Kirk White and Jerome P. Reiter

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We build up from the plant level an "aggregate(d) Solow residual" by estimating every U.S. manufacturing plant's contribution to the change in aggregate final demand between 1976 and 1996. We decompose these contributions into plant-level resource reallocations and plant-level technical efficiency changes. We allow for 459 different production technologies, one for each 4- digit SIC code. Our framework uses the Petrin and Levinsohn (2008) definition of aggregate productivity growth, which aggregates plant-level changes to changes in aggregate final demand in the presence of imperfect competition and other distortions and frictions. On average, we find that aggregate reallocation made a larger contribution than aggregate technical efficiency growth. Our estimates of the contribution of reallocation range from 1:7% to2:1% per year, while our estimates of the average contribution of aggregate technical efficiency growth range from 0:2% to 0:6% per year. In terms of cyclicality, the aggregate technical efficiency component has a standard deviation that is roughly 50% to 100% larger than that of aggregate total reallocation, pointing to an important role for technical efficiency in macroeconomic fluctuations. Aggregate reallocation is negative in only 3 of the 20 years of our sample, suggesting that the movement of inputs to more highly valued activities on average plays a stabilizing role in manufacturing growth.

Keywords: Macroeconomic Fluctuations; Aggregate Productivity Growth; Reallocation; Technical Efficiency (search for similar items in EconPapers)
JEL-codes: E32 L6 O47 (search for similar items in EconPapers)
Pages: 69 pages
Date: 2009-12
New Economics Papers: this item is included in nep-eff and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://www2.census.gov/ces/wp/2009/CES-WP-09-43.pdf First version, 2009 (application/pdf)

Related works:
Journal Article: The Impact of Plant-level Resource Reallocations and Technical Progress on U.S. Macroeconomic Growth (2011)
Working Paper: The Impact of Plant-level Resource Reallocations and Technical Progress on U.S. Macroeconomic Growth (2011)
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:cen:wpaper:09-43

Access Statistics for this paper

More papers in Working Papers from U.S. Census Bureau, Center for Economic Studies Contact information at EDIRC.
Bibliographic data for series maintained by Dawn Anderson ().