The Production-Side Approach to Estimating Embodied Technological Change

Plutarchos Sakellaris and Daniel Wilson

Electronic Working Papers from University of Maryland, Department of Economics

Abstract: We estimate the rate of embodied technological change directly from plant-level manufacturing data on current output and input choices along with histories on their vintages of equipment investment. Our estimates range between 8 and 17 percent for the typical U.S. manufacturing plant during the years 1972-1996. Any number in this range is substantially larger than is conventionally accepted with some important implications. First, the role of investment- specific technological change as an engine of growth is even larger than previously estimated. Second, existing producer durable price indices do not adequately account for quality change. As a result, measured capital stock growth is biased. Third, if accurate, the Hulten and Wykoff (1981) economic depreciation rates may primarily reflect obsolescence.

Keywords: technological change; production function estimation (search for similar items in EconPapers)
JEL-codes: D24 O3 (search for similar items in EconPapers)
Date: 2000-12
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Citations: View citations in EconPapers (4)

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Working Paper: The production-side approach to estimating embodied technological change (2001)
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