The Measurement of Growth under Embodied Technical Change

Omar Licandro (), Javier Ruiz-Castillo and Jorge Durán

No 2002011, Discussion Papers (REL - Recherches Economiques de Louvain) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: New U.S. evidence from NIPA contradicts some of the well-known Kaldor stylized facts, and call for a reformulation of the modem theory of economic growth. Among these new facts, two must be stressed : A permanent decline in the relative price of durable goods, and a permanent increase in the real equipment to real GDP ratio. To be consistent with these new facts, growth models must include at least two sectors and address the problem of defining aggregate output. In this paper, the economic theory of index numbers is used to define the growth rate of real output in a growth model with embodied technical change. The main findings are : (i) NIPA's methodology measures growth in accordance with the economic theory on index numbers, and (ii) when the growth rate is measured as in NIPA, the contribution of embodied technical change to per capital GDP growth in the U.S. is 69%, which reinforce the claim that embodied technical change is important for growth.

Keywords: Embodied technical change; Growth facts; Growth accounting; Index number theory (search for similar items in EconPapers)
JEL-codes: O30 O41 O47 (search for similar items in EconPapers)
Pages: 14
Date: 2002-03-01
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Citations: View citations in EconPapers (16)

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Related works:
Journal Article: The Measurement of Growth under Embodied Technical Change (2002)
Working Paper: The Measurement of Growth under Embodied Technical Change (2001)
Working Paper: The Measurement of Growth under Embodied Technical Change
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