Quantifying Embodied Technological Change

Sakellaris, Plutarchos; Wilson, Daniel J.

doi:10.24148/wp2001-16

Working Paper

Quantifying Embodied Technological Change

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.

JEL Classification: O3; D24; L60;

https://doi.org/10.24148/wp2001-16

Status: Published in Review of Economic Dynamics, vol. 7, no. 1 , January 2004, Pages 1-26