 The Measurement of Growth under Embodied Technical ChangeOmar Licandro (), Jorge Durán and Javier Ruiz-Castillo No 2001-09, Working Papers from FEDEA Abstract: The new U.S. data from NIPA contradict some of the well-known Kaldor stylized facts, and call for a reformulation of the modern theory of economic growth. Among these new facts, three must be stressed: A permanent decline in the relative price of durable goods, a permanent increase in the real equipments to real GDP ratio, and a large long run growth rate of equipments relative to the growth rate of non durable consumption. In order to be consistent with these new facts, growth models must include at least two sectors, and the problem of defining aggregate output arises. In this paper, the economic theory of index numbers is used to propose a definition of the output growth rate, which is consistent with a representative agent's preferences in a growth model with embodied technical change. The main findings are that (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 of 69\%, much larger than the 58\% found by Greenwood, Hercowitz and Krusell (1997). New Economics Papers: this item is included in nep-dev, nep-dge, nep-eff, nep-ino, nep-pke and nep-tid Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fda:fdaddt:2001-09 Access Statistics for this paper More papers in Working Papers from FEDEA |
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