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Accounting for Growth

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  • Jeremy Greenwood
  • Boyan Jovanovic

Abstract

A satisfactory account of the postwar growth experience of the United States should be able to come to terms with the following three facts: 1. Since the early 1970s there has been a slump in the advance of productivity. 2. The price of new equipment has fallen steadily over the postwar period. 3. Since the mid-1970s the skill premium has risen. Variants of Solow's (1960) vintage-capital model can go a long way toward explaining these facts, as this paper shows. In brief, the explanations are: 1. Productivity slowed down because the implementation of information technologies was both costly and slow. 2. Technological advance in the capital goods sector has lead to a decline in equipment prices. 3. The skill premium rose because the new, more efficient capital is complementary with skilled labor and/or because the use of skilled labor facilitates the adoption of new technologies.

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  • Jeremy Greenwood & Boyan Jovanovic, 1998. "Accounting for Growth," NBER Working Papers 6647, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:6647
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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