What happens when the technology growth trend changes?: transition dynamics, capital growth and the \"new economy\"

Michael Pakko

No 2001-020, Working Papers from Federal Reserve Bank of St. Louis

Abstract: The rapid increase in U.S. economic growth during the late 1990s inspired speculation that an acceleration in the rate of technological progress had given rise to an increase in potential output growth. This paper considers the transition dynamics associated with such a change using a general equilibrium framework that incorporates stochastic growth trends. The model suggests that transition dynamics associated with a shift in the technological growth trend can have important implications for macroeconomic growth patterns, particularly when technological change is investment-specific. Simulations of the post-WWII U.S. economy show that the model's internal propagation mechanism is capable of explaining a significant portion of the variation in growth rates over the sample period, particularly for investment, capital accumulation, and employment.

Keywords: Productivity; Technology; economic conditions - United States (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (14)

Published in Review of Economic Dynamics, April 2002, 5(2), pp. 376-407

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Related works:
Journal Article: What Happens When the Technology Growth Trend Changes?: Transition Dynamics, Capital Growth and the 'New Economy' (2002)
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DOI: 10.20955/wp.2001.020

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