Working Paper
Some Implications of Using Prices to Measure Productivity in a Two-Sector Growth Model
Abstract: A two-sector growth model is used to study U.S. productivity growth since the 1960s. Sector-specific measures of productivity are constructed by imposing theoretical restrictions from this model on data on factor prices and the relative price of capital. Under the identifying restriction that capital-specific productivity growth be orthogonal to economy-wide productivity growth, shifts in TFP growth can be explained in terms of an economy-wide productivity growth slowdown in the mid-1970s and an acceleration in productivity growth in the capital goods sector in the mid-1990s. Also, interpreting changes in the relative price of capital as capital-specific technological change implies a theoretical restriction on the productivity processes that is rejected by our data.
https://doi.org/10.24148/wp2001-10
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Provider: Federal Reserve Bank of San Francisco
Part of Series: Working Paper Series
Publication Date: 2003-07-01
Number: 2001-10