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!else"ier!com#locate#$me
%rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A +iscussion of
to a))roac&es
Jeremy %reenoo+a, Per -rusell.,c,/
a 0e)artment of Economics, 1ni"ersity of Pennsyl"ania, P&ila+el)&ia, PA 23245, 1SA
. 0e)artment of Economics, Princeton 1ni"ersity, Princeton, 222 6is&er 7all, Princeton, NJ 48955, 1SA
c IIES, Stoc:&olm 1ni"ersity, 24; 32 Stoc:&olm, Se+en
Recei"e+ 28 January <44;= acce)te+ < 6e.ruary <44;
A.stract
To a))roac&es ta:en to t&e em.o+iment >uestion are com)are+ an+ +iscusse+* >uantitati"e
t&eory an+ tra+itional 'rot& accountin'! T&e to a))roac&es 'i"e "ery +ifferent estimates for t&e
contri.ution of in"estment(s)eci c tec&nolo'ical a+"ance to economic 'rot&! T&erefore, t&e
a))roac& ta:en matters! It is ar'ue+ t&at t&e measures use+ in tra+itional 'rot& accountin' to
'au'e t&e im)ortance of in"estment(s)eci c tec&nolo'ical )ro'ress &a"e little economic content,
unli:e t&e measure o.taine+ from >uantitati"e t&eory!
r <44; Else"ier ?!@! All ri'&ts reser"e+!
JEL classi cation* A52= A5B
-eyor+s* In"estment(s)eci c tec&nolo'ical )ro'ress= Ca)ital em.o+iment= %rot& accountin'
2! Intro+uction
S&oul+ you use a mo+el or notC T&at is a >uestion often facin' em)irical researc&ers!
Mo+els are use+ in macroeconomics in a i+e "ariety of conteDts! 6or >uestions a.out
.usiness cycles or 'rot&, t&is fre>uently in"ol"es +e nin' )recisely t&e im)ulses affectin'
/Corres)on+in' aut&or! 0e)artment of Economics, Princeton 1ni"ersity, III 6is&er 7all, Princeton, NJ 48955,
1SA! Tel!*E2 ;43 <98 544F= faD* E2 ;43 <98 ;523!
E(mail a++ress* ):rusellG)rinceton!e+u (P! -rusell)!
4F45(F3F<#H ( see front matter r <44; Else"ier ?!@! All ri'&ts reser"e+!
+oi*24!242;#$!$moneco!<44;!4<!448
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] <
t&e economy, t&e )ro)a'ation mec&anism t&at ma)s t&ese im)ulses into macro a''re'ates,
a met&o+ for )ic:in' functional forms an+ )arameter "alues, an+ a criterion to .e use+ for
matc&in' t&e mo+el it& +ata! T&e +eman+e+ )recision is a 'reat t&ou'&t(clarifyin' an+ (
+isci)linin' +e"ice! T&is a))roac& is +u..e+ II>uantitati"e t&eoryJJ, an+ &as its roots in
famous )a)ers .y -y+lan+ an+ Prescott (238<) an+ Prescott (238;)!
Tra+itional 'rot& accountin' ta:es a more structure(free a))roac&, &ic& +oes not
+e)en+ u)on functional forms or )arameter "alues! T&is allos for more eDi.ility an+,
some .elie"e, a 'reater +e'ree of 'enerality! A fully articulate+ 'eneral e>uili.rium mo+el
can .e "ery cum.ersome an+ s)eci c! T&e met&o+ em)loye+ in tra+itional 'rot&
accountin' as s)ane+ .y SoloJs (239B) lan+mar: )a)er! T&e assum)tions re>uire+ to
use it are fe* constant returns to scale, )erfect com)etition, mo.ile factors, an+ t&e
eDistence of eit&er a''re'ate or sectoral )ro+uction functions! 6urt&ermore, it is
elementary to im)lement! T&is a))roac& &as alloe+ economists to catalo'ue in"alua.le
styliKe+ facts a.out total factor )ro+ucti"ity (T6P) at a''re'ate an+ sectoral le"els, .ot&
it&in an+ across countries!
L&et&er or not one s&oul+ ta:e a structural or nonstructural a))roac& to em)irical
>uestions often +e)en+s u)on t&e issue at &an+! T&e >uestion of interest &ere is t&e
contri.ution of in"estment(s)eci c tec&nolo'ical )ro'ress to economic 'rot&! It is
esta.lis&e+ t&at >uantitati"e t&eory an+ tra+itional 'rot& accountin' re)ort "ery
+ifferent n+in's concernin' t&e em)irical im)ortance of in"estment(s)eci c tec&nolo'ical
)ro'ress for t&e 'rot& )rocess! T&erefore, t&e a))roac& a+o)te+ to tac:le t&is >uestion
matters! So, &ic& one s&oul+ .e use+C It ill .e ar'ue+ t&at >uantitati"e t&eory is t&e
)referre+ route to ta:e for measurin' t&e contri.ution of in"estment(s)eci c tec&nolo'ical
)ro'ress to economic 'rot&! T&e reason is t&at t&e measure a+"ance+ .y >uantitati"e
t&eory to 'au'e t&e im)act of in"estment(s)eci c tec&nolo'ical a+"ance on economic
'rot& &as a ell(+e ne+ economic inter)retation! It unco"ers t&e fraction of economic
'rot& t&at results from in"estment(s)eci c tec&nolo'ical )ro'ress= i!e!, t&e fraction of
'rot& t&at oul+ remain if ot&er forms of tec&nolo'ical )ro'ress ere s&ut +on!
Tra+itional 'rot& accountin' cannot anser t&is sim)le >uestion! L&yC T&e reason is
sim)le! Aut)ut 'rot& +eri"es from .ot& tec&nolo'ical a+"ance an+ ca)ital accumulation!
Ca)ital accumulation is )artly +ri"en .y tec&nolo'ical )ro'ress! 7ence, in or+er to
estimate t&e contri.ution of a )articular form of tec&nolo'ical )ro'ress to economic
'rot& one must .e a.le to ma:e an inference a.out &o muc& of ca)ital accumulation
as in+uce+ .y t&is form of tec&nolo'ical a+"ance! Ma:in' suc& an attri.ution re>uires a
com)lete structural mo+el! In t&e a.sence of suc& a mo+el, tra+itional 'rot& accountin'
resorts to a+ &oc measures it& little economic content!
<! %reenoo+ et al! (233B)
T&is is an eDam)le of >uantitati"e t&eory! T&e startin' )oint for t&e analysis is t&e
o.ser"ation t&at t&e relati"e )rice of ne e>ui)ment &as s&on tremen+ous +ecline o"er
t&e )ostar )erio+! At t&e same time, t&e ratio of real e>ui)ment in"estment to real %0P
rose! T&ese to facts are at "ariance it& t&e stan+ar+ neoclassical 'rot& mo+el it& $ust
neutral tec&nolo'ical )ro'ress, an+ su''est t&at it mi'&t .e fruitful to loo: at tec&nolo'ical
)ro'ress in t&e e>ui)ment()ro+ucin' sector! T&us, t&e eDercise is 'ui+e+ from t&e "ery
.e'innin' .y t&e com)arison of )re+ictions from economic t&eory it& t&e +ata! T&ere are
to im)ulses in t&e mo+el* t&e rates of in"estment(s)eci c (or ca)ital(em.o+ie+)
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] F
tec&nolo'ical )ro'ress, M >, an+ neutral (or +isem.o+ie+) tec&nolo'ical c&an'e, M K!2 T&e
)ro)a'ation mec&anism is t&e neoclassical 'rot& mo+el! In its one(sector "ersion, t&e
tec&nolo'ical structure consi+ere+ can .e summariKe+ .y
c N i O y O Kf P:= lQ, (2)
an+
R
: O >i +:! (<)
7ere c an+ i +enote consum)tion an+ in"estment in units of consum)tion, an+ > re)resents
t&e num.er of units of ne ca)ital t&at can .e manufacture+ from a unit of nal out)ut!
T&e structure &as its roots in SoloJs (23;4) classic )a)er! %i"en t&is setu), t&e relati"e
)rice of in"estment 'oo+s, ), is e>ual to 2S>! T&erefore, on t&e left(&an+ si+e of (2)
e"eryt&in' is eD)resse+ in units of consum)tion, t&e numeT raire! Note t&at in (<) t&e
>uantities R
:, >i, an+ : are all eD)resse+ in ef ciency units of ca)ital!
A"er lon' )erio+s of time, la.orJs s&are of income &as .een relati"ely constant! In li'&t
of t&is o.ser"ation, assume t&at )ro+uction is 'o"erne+ .y a Co..0ou'las )ro+uction
function, or t&at
(F) Kf P:= lQOK:a l 2 a for 4oao2!
Solo (239B, )! F23) s&oe+ t&at t&is functional form ts t&e lon'(run +ata ell! Alon' a
.alance+ 'rot& )at& out)ut measure+ in consum)tion units, or y, 'ros at t&e rate '
'i"en .y ' OPM K N a M >QSP2 aQ!< T&e contri.ution of in"estment(s)eci c tec&nolo'ical
a+"ance to out)ut 'rot& is t&en
a M >
(5)
M K N a M> !
T&e a.o"e eD)ression can .e use+ for 'rot& accountin'! E>! (5) &as a clear inter(
)retation in terms of t&e t&eory +e"elo)e+! It 'i"es t&e fraction of lon'(run 'rot& t&at
oul+ remain if all neutral tec&nolo'ical a+"ance is s&ut +on PM
K O 4Q! In ot&er or+s, it
'i"es t&e fraction of lon'(run 'rot& +ue to in"estment(s)eci c tec&nolo'ical )ro'ress!F
To use t&is e>uation, all one nee+s to :no is a, M > an+ MK! In t&e analysis, in"estment(
s)eci c tec&nolo'ical )ro'ress, M >, can .e i+enti e+ from o.ser"ations on t&e c&an'e in t&e
relati"e )rice of in"estment 'oo+s!5 T&e )arameter a can .e )inne+ +on usin'
o.ser"ations on ca)italJs s&are of income! Neutral tec&nolo'ical )ro'ress, M
K, can .e
2 AultonJs (<44;) notation is use+ t&rou'&out t&e )a)er! A IM J o"er a "aria.le +enotes its rate of c&an'e &ile a
I J si'ni es $ust its c&an'e (or a time +eri"ati"e)!
< To ensure .alance+ 'rot&, %reenoo+ et al! (233B) also assume t&at a'ents in t&e economy &a"e )references
t&at are lo'arit&mic in consum)tion an+ leisure! T&ese )references are )resente+ laterUsee E>! (8)!
F T&is t&ou'&t eD)eriment can .e im)lemente+ in more 'eneral mo+els it& in"estment(s)eci c tec&nolo'ical
)ro'ress &ere a close+(form solution alon' t&e lines of (5) may not eDist! T&e only re>uirement is t&at t&e mo+el
is com)uta.le! If so, t&en one can s&ut +on neutral tec&nolo'ical )ro'ress an+ calculate numerically &at
&a))ens to economic 'rot&! A++itionally, it +oes not re>uire t&e assum)tion of .alance+ 'rot&! Ane $ust nee+s
to .e a.le to com)ute t&e transitional +ynamics for t&e economy in >uestion! T&us, t&e i+ea is >uite 'eneral!
5 T&e a.ility to i+entify > it& 2S) +e)en+s on t&e structure a+o)te+! 6or eDam)le, 7ornstein an+ -rusell (233;)
s&o it&in t&e conteDt of a to(sector 'rot& mo+el t&at if ca)italJs s&are is loer in t&e in"estment sector t&an
in t&e consum)tion sector, &ic& seems to &ol+ true in t&e +ata, .
> must .e .i''er t&an . )! T&erefore, t&e rate of
in"estment(s)eci c tec&nolo'ical a+"ance oul+ .e e"en &i'&er t&an t&e rate of )rice +ecline in t&is case!
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] 5
measure+ resi+ually "ia (<) an+ (F)! T&e analysis conclu+es t&at a.out 98V of )ostar
'rot& in t&e last century is +ue to in"estment(s)eci c tec&nolo'ical )ro'ress!
F! Aulton (<44;)
Aulton (<44;) conten+s t&at tra+itional 'rot& accountin' can .e use+ to come u) it&
a measure of t&e contri.ution of in"estment(s)eci c tec&nolo'ical a+"ance to economic
'rot&! Aulton (<44;) +oes not ar'ue t&at t&e tra+itional 'rot& accountin' a))roac& or
measure is .etter or orse t&an t&e one )resente+ in %reenoo+ et al! (233B)! In fact, &e
moti"ates &is measure usin' a to(sector mo+el similar to t&e one )resente+ in %reenoo+
et al! (233B, Section @!A)! To 'au'e t&e contri.ution of in"estment(s)eci c tec&nolo'ical
)ro'ress to economic 'rot&, Aulton W<44;, E>! (<4)] )ro)oses t&e folloin' measure*
s. >
(9)
.K N s.> ,
&ere s is t&e s&are of in"estment in out)ut as 'i"en .y s O iSPc N iQ! In a formal sense,
t&en, (9) is tra+itional 'rot& accountin'Js su.stitute for (5)! T&e to formulae loo: "ery
simila r= in (9) s re)laces t&e a t&at is in (5)! T&is +ifference turns out to .e im)ortant!
F!2! Accountin' )ractice matters
0oes it matter &et&er (5) or (9) is use+ to measure t&e contri.ution of in"estment(
s)eci c tec&nolo'ical )ro'ress to economic 'rot&C T&e anser is yes, as Ta.le 2 s&os!
6irst, note t&at AultonJs formula results in a "ery +ifferent n+in' t&an t&e %reenoo+
et al! one, for a 'i"en set of estimates on a, .
>, s,an+. K! Aulton )resents to sets of estimates
for t&ese in)uts, to it %reenoo+ et al!Js an+ &is on! Ta:e t&e n+in's .ase+ u)on t&e
%reenoo+ et al! (233B) estimates, as 'i"en .y t&e rst column (of num.ers) in t&e ta.le!
E>! (5) yiel+s an anser of 98V "ersus t&e F8V +eri"e+ from (9), a +ifference of <4
)ercenta'e )oints!9 7ence, t&e contri.ution of in"estment(s)eci c tec&nolo'ical )ro'ress
to 'rot& is a.out 2!9 lar'er usin' (5) "ersus (9)! Mec&anically s)ea:in', it arises .ecause
ca)italJs s&are of income, a, is lar'er t&an t&e s&are of in"estment in out)ut, s!; AultonJs
(<44;, a.stract) statement t&at IIt&e +ifferences .eteen W%reenoo+ et al!Js (233B)]
conclusions an+ t&ose of 'rot& accountin' stu+ies a.out t&e eDtent to &ic& em.o+iment
eD)lains 1!S! economic 'rot& are foun+ to relate more to +ata t&an to met&o+olo'yJJ is
t&erefore &ar+ to un+erstan+!B
F!2!2! T&e +e nition of out)ut
T&e +e nition use+ for out)ut ill matter for calculatin' t&e contri.ution of in"estment(
s)eci c tec&nolo'ical )ro'ress to a''re'ate out)ut 'rot&! %reenoo+ et al! (233B)
9 Note t&at in t&e %reenoo+ et al! (233B) mo+el t&e ca)ital stoc: is .ro:en +on into e>ui)ment an+
structures! In"estment(s)eci c tec&nolo'ical )ro'ress is assume+ to affect e>ui)ment only! T&us, rat&er t&an (5)
t&e actual formula use+ is ae .
>SP. K N ae . >Q, &ere ae is t&e eD)onent on e>ui)ment in a Co..0ou'las )ro+uction
function! Li:eise, in (9) s s&oul+ .e re)lace+ .y se , or t&e 0omar ei'&t on e>ui)ment!
; E"en &en usin' AultonJs (<44;) estimates for a, .
>, s, an+ .K t&e +ifference is 22 )ercenta'e )oints, it& t&e
%reenoo+ et al! (233B) measure yiel+in' a num.er a.out 2!5 lar'er t&an AultonJsUsee t&e last column in t&e
ta.le! So, t&e measure use+ clearly matters!
B In t&e >uote t&e or+ IIt&eirJJ &as .een re)lace+ it& II%reenoo+ et al! (233B)JJ!
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] 9
Ta.le 2
Contri.ution to 'rot&
0ataUa, .>, s, .K
MeasureUE>s! (5), (9) an+ (B) %reenoo+ et al! Aulton
%reenoo+ et al!UE>! (5), consum)tion .ase+ 4!98a 4!FBa
AultonUE>! (9) 4!F8a 4!<;a
%reenoo+ et al!UE>! (B), 0i"isia in+eD .ase+ 4!;9 4!59
a Source* Aulton (<44;, Ta.le 2)!
measure out)ut in non+ura.le consum)tion units! E>! (5) is )re+icate+ u)on t&is
+e nition! In t&e conteDt of t&e stan+ar+ neoclassical 'rot& mo+el, &ere non+ura.le
consum)tion an+ leisure are t&e only 'oo+s consume+, t&e consum)tion(.ase+ out)ut
measure is t&e most natural one to use!8 T&is ill .e +iscusse+ latter on! Tra+itional
'rot& accountin' uses a 0i"isia in+eD for tallyin' out)ut 'rot&! So, alternati"ely
su))ose in line it& tra+itional 'rot& accountin' t&at a''re'ate out)ut 'rot& is
calculate+ usin' a 0i"isia in+eD! 7o ill t&is c&an'e t&e %reenoo+ et al! (233B) estimate
of t&e contri.ution of in"estment(s)eci c tec&nolo'ical a+"ance to out)ut 'rot&C 0oes
t&e 'a) .eteen t&e %reenoo+ et al! an+ tra+itional 'rot& accountin' measures 'ro
lar'er or smallerC
A "irtue of >uantitati"e t&eory is t&at it s)eci es a )recise ay for ma))in' t&eory into
any +esire+ measure of out)ut! To see t&is +e ne t&e rate of 'rot& in out)ut usin' t&e
0i"isia in+eD, .
X,.y
.
X OP2 sQ.c N s . >i, (;)
&ere a'ain s is in"estmentJs s&are of out)ut!3 In t&e %reenoo+ et al! (233B) frameor: it
&a))ens t&at alon' a .alance+ )at& .
c OY. K N a.> SP2 aQ an+ . >i OY. K N .> SP2 aQ so t&at
K NP2 sQa. > N s.> >
.
X O . >54Q!
2 a 5 .K N a. 2 a O ' P&en .
Aut)ut 'rot& usin' t&e 0i"isia in+eD, . X , is &i'&er t&an t&e consum)tion(.ase+ one, '!
It is t&en easy to see t&at contri.ution of in"estment(s)eci c tec&nolo'ical )ro'ress to
'rot& usin' a 0i"isia in+eD is
P2 sQa. > N s.>
(B)
.K NP2 sQa. > N s.> !
T&is formula is t&e analo'ue to (5) &en a 0i"isia in+eD is use+! Note t&at it is not t&e
same conce)tual measure as is )ro)ose+ .y Aulton (<44;), as 'i"en .y (9)! T&is is &at
+oes t&e $o., t&ou'&= it ma)s t&e )re+ictions of t&e t&eory into t&e 0i"isia in+eD! It 'i"es
t&e fraction of .
X t&at is +ue to in"estment(s)eci c tec&nolo'ical )ro'ress! A.ser"e t&at
P2 sQa. > N s.> >
.K NP2 sQa. > N s.> 5 a. .K N a .> ,
8 6or a +etaile+ +iscussion on t&e a))ro)riateness of +ifferent out)ut measures, see 7ornstein an+ -rusell
(<444)!
3 L&elan (<44F, )! ;55) notes t&at 'rot& in c&ain(ei'&te+ %0P is ell a))roDimate+ .y a 0i"isia in+eD!
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] ;
.ecause t&e left(&an+ si+e is increasin' in P2 sQa. > N s.> &en . K is )ositi"e, an+
(2 sQa. > N s.>5a.> for all a= s <P4= 2Q an+ . >54! T&e left(&an+ si+e of t&e a.o"e eD)ression
'i"es t&e contri.ution of in"estment(s)eci c a+"ance to 'rot& &en out)ut 'rot& is
+e ne+ usin' a 0i"isia in+eD, &ile t&e ri'&t(&an+ si+e re)resents t&e same t&in' &en
out)ut 'rot& is +enominate+ in consum)tion units! 7ence, measure (B) ill re)ort t&at
in"estment(s)eci c tec&nolo'ical )ro'ress accounts for a lar'er fraction of lon'(run
'rot& t&an ill (5)! T&us, t&e estimate use+ in %reenoo+ et al! (233B) is a conser"ati"e
oneUcf! %reenoo+ et al! (233B, Section I@)!
T&erefore, t&e 'a) .eteen t&e %reenoo+ et al! (233B) measure an+ t&e tra+itional
'rot& accountin' one ill i+en &en a 0i"isia in+eD is use+ to measure out)ut 'rot&!
?y &o muc&, is t&e natural >uestion! 1sin' t&e %reenoo+ et al! estimates for t&e in)uts
into E>! (B) results in ;9V of 'rot& (see t&e t&ir+ ro in t&e ta.le) .ein' attri.ute+ to
in"estment(s)eci c tec&nolo'ical )ro'ressZ24 T&is is 2!B times lar'er t&an t&e F8V foun+
usin' t&e tra+itional 'rot& accountin' measure!22 Ance a'ain, accountin' )ractice clearly
matters! A"erall t&e measures use+ .y %reenoo+ et al! an+ tra+itional 'rot& accountin'
to 'au'e t&e im)ortance of in"estment(s)eci c tec&nolo'ical )ro'ress to 'rot& 'i"e "ery
+ifferent estimates, e"en &en t&e same +ata in)uts (for a, .
>, s,an+. K) are use+!
F!<! T&e im)ortance of t&e +ata use+ for t&e )rice of in"estment 'oo+s
L&en measurin' t&e contri.ution of in"estment(s)eci c tec&nolo'ical )ro'ress to
economic 'rot& it ill in+ee+ matter &at estimates for a, . >, s, an+ .K are in)utte+ into t&e
formulae (5), (B) an+ (9)! T&is )oint is trite, t&eoretically s)ea:in'! It matters
>uantitati"ely as a com)arison across t&e last to columns in Ta.le 2 s&os! T&e set of
estimates o.taine+ for a, .
>, s,an+.K +e)en+s u)on &et&er or not one uses %or+onJs
(2334)Uor ot&erU>uality a+$ustments to t&e relati"e )rice series for in"estment!
Recall t&at in t&e %reenoo+ et al! (233B) frameor: t&e relati"e )rice of in"estment
'oo+s, ), can .e use+ to i+entify >, .ecause > O 2S) so t&at . > O . )! %reenoo+ et al!Js
(233B) estimates are .ase+ on %or+onJs (2334) +ata for t&e )rice of in"estment 'oo+s,
&ile AultonJs (<44;) estimates are )re+icate+ u)on stan+ar+ National Income an+
Pro+uct Accounts (NIPA) +ata! 7ercoitK (2338, 6i'ure 2) illustrates t&at %or+onJs
(2334) >uality(a+$uste+ )rice +eclines at a faster cli) t&an t&e tra+itional NIPA one! Aulton
(<44;) +oes not c&allen'e, &oe"er, t&e use of %or+onJs (2334) +ata! It is also use+ in
tra+itional 'rot& accountin' eDercises, suc& as 7ulten (233<)! L&ic& measure s&oul+ .e
2 4 T&e formula use+ is
> P2 se Qae . > N se P2 asQ.
. > , K NP2 se Qae . > N se P2 a sQ.
&ere ae an+ as are t&e eD)onents on e>ui)ment an+ structures in a Co..0ou'las )ro+uction function, an+ se is
t&e 0omar ei'&t on e>ui)ment! 6or t&e %reenoo+ et al! (233B) estimates in)ut into t&e a.o"e formula
ae O 4*2B, as O 4*2F, . > O 4*4F<, se O 4*4BF an+ . K O 4*44F3, &ile for t&e Aulton (<44;) ones use ae O 4*2B,
>, an+ .K as O 4*2F, . > O 4*42<, se O 4*242, an+ . K O 4*44F;! To ca"eats are in or+er* (i) t&e )arameters ae , a s, .
s&oul+ really .e re(cali.rate+ an+ (estimate+, alon' t&e lines of %reenoo+ et al! (233B), usin' c&aine+(in+eDe+
%0P +ata instea+ of t&e consum)tion(+enominate+ +ata &ile still usin' %or+onJs (2334) )rice in+eD for ne
e>ui)ment= (ii) se is en+o'enous in (B) an+ t&erefore s&oul+ .e alloe+ to c&an'e &en .K is set to Kero! T&e a.o"e
s&ortcuts are ta:en to ma:e t&e com)arison it& Aulton (<44;) easier!
2 2 Alternati"ely, ta:e AultonJs (<44;) estimates! In"estment(s)eci c tec&nolo'ical a+"ance t&en accounts for
59V of 'rot&, &ic& is muc& lar'er (2!B times) t&an t&e <;V returne+ .y tra+itional 'rot& accountin'!
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] B
use+C It is li:ely t&at t&e NIPA un+erestimate t&e rate of )rice +ecline in +ura.le 'oo+s!
Recent or: .y ?ils (<445) n+s t&at t&e ?ureau of La.or Statistics, as a conse>uence of
t&e +if culties of ta:in' into account >uality c&an'e, seriously o"erestimates t&e rate of
)rice increase in +ura.le 'oo+s! 7e ()! 5) n+s IIt&at a"era'e >uality 'rot& for +ura.les
&as li:ely .een un+erstate+ .y FV )er year, or more, +urin' t&e )ast 29 years!JJ W?ils (<445)
+oes not use &e+onic )ricin', unli:e %or+on (2334)!]
5! L&ic& accountin' )ractice s&oul+ .e use+C
It &as .een esta.lis&e+ t&at t&e a))roac& ta:en to 'rot& accountin' it& in"estment(
s)eci c tec&nolo'ical a+"ance matters in a >uantitati"e sense! L&ic& one s&oul+ .e use+
t&enC T&at is, s&oul+ (5) or (9) .e use+ to measure t&e contri.ution of in"estment(s)eci c
tec&nolo'ical )ro'ress to economic 'rot&C It is &ar+ to see &at t&e economic content of
(9) is* it +oes not a))ear to .e t&e anser to any meanin'ful economic >uestion! It sim)ly
mec&anically ta.ulates t&e s&are of in"estment(s)eci c tec&nolo'ical )ro'ress in (0i"isia(
out)ut(.ase+) a''re'ate T6P 'rot&, &ere t&e latter is +e ne+ to .e a ei'&te+ a"era'e
of sectoral T6P 'rot& rates or P2 sQ.
K N sP.K. >QO.K N s.>! It +oes not 'i"e t&e fraction of
economic 'rot& t&at is +ue to in"estment(s)eci c tec&nolo'ical )ro'ress! L&yC T&e
anser is t&at 'rot& in out)ut +eri"es from to sources, "iK tec&nolo'ical )ro'ress an+
ca)ital accumulation! T&us, in or+er to .rea: +on t&e contri.utions t&at t&e to sources
of tec&nolo'ical )ro'ress ma:e to out)ut 'rot&, one &as to :no &o muc& of t&e
'rot& in t&e ca)ital stoc: can .e ascri.e+ to t&e to forms of tec&nolo'ical )ro'ress!
Suc& an inference re>uires an economic mo+el! T&us, t&e usefulness of a measure suc& a s
(9) is >uestiona.le!
Per&a)s (9) )ro"i+es a .etter measure of t&e c&an'es in elfare o"er time t&an +oes (5)C
As in %reenoo+ et al! (233B), +e ne )erio+(t lifetime utility, 1t ,.y
[ 2 [ 2
(8) 1 t O y ln ctN s e . s +s NP2 yQ lnP2 lt Ns Qe . s +s,
4 4
&ere ctNs an+ lt Ns are )erio+(Pt N sQ non+ura.le consum)tion an+ &ours or:e+! Alon' a
.alance+ 'rot& )at&, ct Ns 'ros at t&e same constant rate as out)ut, ' OPM
K N a M>QSP2 aQ!
7ours or:e+ ill .e constant, say at some le"el l ! 7ence, un+er .alance+ 'rot& )erio+(
t lifetime utility is 'i"en .y
(3) 1 t O y ln ct S. N y'S.< NP2 yQ lnP2 l QS.!
It is easy to see t&at +1t S+t O y'S., so t&at t&e c&an'e in lifetime utility o"er time is
connecte+ to t&e 'rot& rate in out)ut measure+ in consum)tion units! T&erefore, it&in
t&e rare e+ atmos)&ere of t&e mo+el, t&e 'rot& rate of out)ut in consum)tion units is a
)erfect measure of t&e c&an'e in elfare o"er time!
If one )refers not to measure elfare c&an'es in utils t&en ima'ine to economies in
.alance+ 'rot&! Let t&e rst economy 'ro at rate ' an+ t&e secon+ at rate '4 o'! T&e
secon+ economy is t&e same as t&e rst, .ut it& in"estment(s)eci c tec&nolo'ical )ro'ress
s&ut +on! 6or sim)licity, let consum)tion in t&e .aseline )erio+ t .e t&e same in .ot&
economies! Peo)le in t&e secon+ economy or: some constant amount l 4 ! 7o muc&
oul+ a )erson &a"e to .e 'i"en in terms of consum)tion in or+er to .e entice+ to mo"e
from t&e rst economy to t&e secon+C To anser t&is >uestion, let el re)resent t&e factor
.y &ic& )erio+(t .aseline consum)tion in t&e secon+ economy oul+ &a"e to .e raise+ so
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] 8
t&at a )erson oul+ .e in+ifferent to t&e mo"e! It is easy to calculate usin' (3) t&at
l OP' '4 QS. NYP2 yQSy lnYP2 l QSP2 l 4 Q
OYa M >SP M K N a M P24Q >Q 'S. NYP2 yQSy lnYP2 l QSP2 l 4 Q !
In t&is elfare calculation it is a'ain eD)ression (5) t&at a))ears, an+ not (9) or any ot&er
eD)ression! \uantitati"e t&eory )ro"i+es a clear ma))in' from measures of tec&nolo'ical
)ro'ress into elfare! WNote t&at tastes are ne"er 'i"en in Aulton (<44;)!] T&e +etails of t&is
ma))in' ill c&an'e as t&e mo+el c&an'es, suc& as &en consumer +ura.les are a++e+U
see L&elan (<44F)!2 <
To conclu+e, t&e a))roac& ta:en to 'rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress matters in a >uantitati"e sense! T&erefore, t&e a))roac& is
im)ortant! Economic t&eory s&oul+ 'ui+e t&e c&oice .eteen t&e to a))roac&es! T&e
tra+itional 'rot& accountin' conce)t a+"ocate+ .y Aulton (<44;) is &ar+ to inter)ret in
an economically meanin'ful ay!
9! Conclusion
?ac: to t&e >uestion )ose+ at t&e .e'innin'! L&ic& met&o+ yiel+s t&e &i'&est returns to
stu+yin' t&e im)ortance of in"estment(s)eci c tec&nolo'ical a+"ance for economicsC ?ot&
met&o+s &a"e .een use+ to o.tain estimates of t&e contri.ution of in"estment(s)eci c
tec&nolo'ical )ro'ress to economic 'rot&, or to catalo'ue styliKe+ facts! T&e estimates
+iffer, so t&e a))roac& ta:en matters! Ta:e t&e >uantitati"e t&eory a))roac& rst! ?y
com)arin' t&e )re+ictions of mo+els it& t&e +ata, it is clear t&at tec&nolo'ical )ro'ress in
t&e ca)ital 'oo+s sector mi'&t .e an im)ortant source of 'rot&! T&e >uantitati"e t&eory
a))roac& )uts 'reat +isci)line on t&e searc& for &o muc&! It )ro"i+es a ma))in' .eteen
in"estment(s)eci c an+ neutral tec&nolo'ical a+"ance, on t&e one &an+, an+ o.ser"a.les
suc& as out)ut an+ t&e relati"e )rice of ne ca)ital 'oo+s, on t&e ot&er! T&is is not it&out
some cost, t&ou'&, .ecause t&e estimates ill +e)en+ to some eDtent u)on t&e +etails of t&e
structure em)loye+! As Solo (<442, )! 2BB) says, IIT&e i+ea of a +ic&otomy .eteen
measurin' an+ mo+ellin' is .rea:in' +onJJ an+ II())ro'ress in measurin' an+
un+erstan+in' in"estment(s)eci c or ca)ital(em.o+ie+ tec&nical c&an'e ill t&en .e tie+
u) it& +ifferent stories a.out t&e ay t&e economy functions!JJ In s&ort, you cannot 'et
somet&in' for not&in'!
Turn no to tra+itional 'rot& accountin'! SoloJs (239B) )a )er s&oin' &o to
o.tain a measure of +isem.o+ie+ tec&nolo'ical )ro'ress in a more or less structure(free
ay is sim)ly .rilliant! It allos for t&e in"alua.le catalo'uin' of styliKe+ facts a.out T6P,
.ot& across time an+ s)ace! 7oe"er, +isenc&ante+ it& t&e notion of +isem.o+ie+
tec&nolo'ical )ro'ress, Solo (23;4) rote anot&er in'enious )a)er ar'uin' t&at
tec&nolo'ical a+"ance is em.o+ie+ in t&e form of ne an+ im)ro"e+ ca)ital 'oo+s!2 F It
met it& little success= (Solo, <442, )! 2B9) &as remar:e+ t&at &e IIli:e+ t&e i+ea, .ut it
2 < In 'eneral, a sim)le solution for t&e c&an'e in elfare, suc& as t&at 'i"en in (24), may not eDist! Pro"i+e+ t&at
t&e mo+el is com)uta.le a numerical solution for t&e c&an'e in elfare can .e calculate+ alon' t&e a.o"e lines!
2 F To >uote Solo (23;4, ))! 3432) on t&e conce)t of +isem.o+ie+ tec&nolo'ical a+"ance* IIIt is as if all
tec&nical )ro'ress ere somet&in' li:e time(an+(motion stu+y, a ay of im)ro"in' t&e or'aniKation an+
o)eration of in)uts it&out reference to t&e nature of t&e in)uts t&emsel"es! T&e stri:in' assum)tion is t&at ol+
an+ ne ca)ital e>ui)ment )artici)ate e>ually in tec&nical c&an'e! T&is con icts it& t&e casual o.ser"ation t&at
many if not most inno"ations nee+ to .e em.o+ie+ in ne :in+s of +ura.le e>ui)ment .efore t&ey can .e ma+e
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] 3
ent no&ere!JJ Part of t&e reason as t&at it as c&allen'e+ .y Jor'enson (23;;, ))! 8
an+ 22) &o sai+ IIone can ne"er +istin'uis& a 'i"en rate of 'rot& in em.o+ie+ tec&nical
c&an'e from t&e corres)on+in' rate of 'rot& in +isem.o+ie+ tec&nical c&an'e!JJ In
a++ition, Jor'enson (23;;, Sections I an+ @) allu+e+ t&at it is not e"en im)ortant for
economics to ma:e suc& a +istinction .eteen t&e to forms of tec&nolo'ical a+"ance!
So, t&e i+ea of ca)ital(em.o+ie+ tec&nolo'ical )ro'ress lan'uis&e+ in t&e tra+itional
'rot& accountin' literature until 7ulten (233<) attem)te+ to re"i"e it! 7e use+
o.ser"ations on t&e relati"e )rice of ne ca)ital 'oo+s to construct a measure of t&e
ca)ital stoc: in ef ciency units, an+ t&ere.y come u) it& an in+eD of em.o+iment .y
com)arin' t&is ca)ital stoc: it& t&e con"entionally measure+ one! 7ulten t&en &arnesse+
t&is in+eD of em.o+iment to t&e tra+itional 'rot& accountin' a))aratus to )ro+uce an
estimate of t&e im)ortance of em.o+iment for economic ' rot&! Aulton (<44;) illustrates
&o a measure of em.o+iment can .e o.taine+ in a more stan+ar+ manner! In eit&er case,
t&ou'&, t&e tra+itional 'rot& a))roac& still fails to anser t&e most a)ro)os >uestion*
7o muc& of economic 'rot& is accounte+ for .y in"estment(s)eci c tec&nolo'ical
)ro'ressC T&e )ro.lem is t&at economic 'rot& +eri"es from to .asic sources, to it
tec&nolo'ical )ro'ress an+ ca )ital accumulation! Ca)ital accumulation results from
tec&nolo'ical )ro'ress! Lit&out an economic mo+el, it is im)ossi.le to allocate ca)ital
accumulation across t&e un+erlyin' causal sources of tec&nolo'ical a+"ance! 6orty( "e
years after SoloJs (23;4) )a)er, t&e )rofession eD)ects more! T&e &istory of t&e searc& for
em.o+iment is a )rime eDam)le of &y t&eory s&oul+ .e connecte+ it& measurement!
In tra+itional 'rot& accountin' estimates of in"estment(s)eci c or neutral tec&nolo(
'ical )ro'ress are t&emsel"es t&e en+ 'oal! 6or >uantitati"e t&eory it is $ust t&e .e'innin'!
T&e fact t&at a lar'e )ortion of tec&nolo'ical )ro'ress is em.o+ie+ in ne ca)ital 'oo+s
may &a"e im)lications t&at arrant furt&er researc&! 6or eDam)le, su))ose t&at ca)ital
su.stitutes for uns:ille+ la.or in t&e mar:et )lace! In"estment(s)eci c tec&nolo'ical
)ro'ress may .e associate+ it& a rise in t&e s:ill )remium! Ar alternati"ely, su))ose t&at
it su.stitutes for la.or at &ome! T&en, it mi'&t lea+ to an increase in female la.or(force
)artici)ation! In fact, t&e a+o)tion of ne tec&nolo'ies o"er time may .e in uence+ .y a
countryJs cost of s:ille+ an+ uns:ille+ la.or! Countries &ere uns:ille+ la.or is relati"ely
ineD)ensi"e may a+o)t +ifferent tec&nolo'ies com)are+ to ones &ere it is eD)ensi"e!
T&erefore, measures of )ro+ucti"ity may &a"e an en+o'enous com)onent in t&em! In+ee+,
t&ese "ery >uestions are alrea +y .ein' a++resse+ .y >uantita ti"e t&eory!
;! Postscri)t* Jor'enson (23;;)
%reenoo+ et al! (233B, Section III) com)are t&eir a))roac& to t&e one ta:en .y
tra+itional 'rot& accountants, as eDem)li e+ .y 7ulten (233<)! 7ulten (233<) re)laces (2)
it&
c N >i O Kf P:= lQ, (22)
&ile retainin' (<)! T&e +ifference .eteen (2) an+ (22) is t&at on t&e left(&an+ si+e of t&e
latter, consum)tion an+ in"estment are measure+ in t&eir on I>uality(a+$uste+J units as
(footnote continue+)
effecti"e! Im)ro"ements in tec&nolo'y affect out)ut only to t&e eDtent t&at t&ey are carrie+ into )ractice eit&er .y
net ca)ital formation or .y t&e re)lacement of ol+(fas&ione+ e>ui)ment .y t&e latest mo+elsyJJ
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] 24
o))ose+ to .ein' "alue+ in terms of consum)tion!2 5 7ulten (233<, )! 3;B) attri.utes t&is
frameor: to 0omar (23;F) an+ Jor'enson (23;;)! Aulton (<44;) "e&emently +is)utes t&is
attri.ution .ecause II(n)eit&er in t&e cite+ 23;; article nor else&ere in &is eDtensi"e
em)irical or: +oes Jor'enson rely on an a''re'ate )ro+uction function of t&e formJJ use+
in t&e a.o"e e>uation!
T&is is )urely a +octrinal +is)ute! It is true t&at no a''re'ate (or any ot&er) )ro+uction
function a))ears in Jor'enson (23;;)Ut&is inclu+es AultonJs (<44;) sectoral ones!
Jor'ensonJs (23;;) )a)er must .e "iee+ it&in t&e conteDt of t&e time* it is an attac: on
SoloJs (23;4) em.o+iment &y)ot&esis, &ic& uses a one(sector 'rot& mo+el! L&at
eDactly Jor'enson &a+ in min+ must .e inter)rete+ from t&e teDt since, unli:e in Solo
(23;4), a com)lete an+ ell(s)eci e+ economic mo+el is not s)elle+ out! At t&e outset,
t&ou'&, Jor'enson states (23;;, )! 2) t&at IIc&an'es in t&e in+eD of T6P may .e inter)rete+
as s&ifts in an a''re'ate )ro+uction function or as I+isem.o+ie+J tec&nical c&an'e!JJ L&en
+iscussin' SoloJs (23;4) one(sector mo+el it& em.o+ie+ tec&nolo'ical )ro'ress,
Jor'enson (23;;, )! 24) clearly su''ests t&at in"estment s&oul+ .e measure+ in >uality(
a+$uste+ units, in a++ition to t&e ca)ital stoc:! 0omar (23;F, )! 98;) also mentions t&at
nal out)ut s&oul+ .e a+$uste+ for >uality im)ro"ement in t&e )ro+uction of ne ca)ital!
T&erefore, t&e attri.ution .y 7ulten (233<) of (22) an+ (<) to 0omar (23;F) an+ Jor'enson
(23;;) seems a))ro)riate!
A se)arate >uestion is &et&er or not AultonJs (<44;) analysis is in t&e s)irit of t&e
Jor'enson (23;;)! S)eci cally, is Aulton (<44;) a mo+ern transliteration of Jor'enson
(23;;)C T&e anser is no! Ironically, Jor'enson states (23;;, ))! 8 an+ 22) t&at IIone can
ne"er +istin'uis& a 'i"en rate of 'rot& in em.o+ie+ tec&nical c&an'e from t&e
corres)on+in' rate of 'rot& in +isem.o+ie+ tec&nical c&an'e!JJ T&us, &is 23;; conclusion
is at s&ar) "ariance it& AultonJs (<44;) one t&at you can +istin'uis& .eteen t&ese to
forms of tec&nolo'ical )ro'ress usin' tra+itional 'rot& accountin'! T&erefore, it is clear
t&at Jor'enson (23;;) coul+ not &a"e &a+ AultonJs (<44;) setu) in min+Uunless Aulton is
silently ta:in' t&e "ie t&at Jor'enson ma+e a lo'ical error .eteen t&e assum)tions an+
conclusions!
Ac:nole+'ment
T&e E+itor, Ro.ert %! -in', in"ite+ t&is comment on Aulton (<44;)! ["i 7ercoitK an+
An+reas 7ornstein are t&an:e+ for t&ou'&tful comments!
References
?ils, M!, <445! Measurin' 'rot& from .etter an+ .etter 'oo+s! Lor:in' Pa)er 24;4;, National ?ureau of
Economic Researc&, Inc!
0omar, E!, 23;F! Total )ro+ucti"ity an+ t&e >uality of ca)ital! Journal of Political Economy B2, 98;988!
%or+on, R!J!, 2334! T&e Measurement of 0ura.le %oo+s Prices! 1ni"ersity of C&ica'o Press, C&ica'o!
%reenoo+, J!, 7ercoitK, [!, -rusell, P!, 233B! Lon'(run im)lications of in"estment(s)eci c tec&nolo'ical
c&an'e! American Economic Re"ie 8B, F5<F;<!
7ercoitK, [!, 2338! T&e Iem.o+imentJ contro"ersy* a re"ie essay! Journal of Monetary Economics 52, <2B<<5!
2 5 T&ou'& a))earin' &ere in le"el form in a resource constraint, >uality a+$ustment is often im)lemente+ in
terms of accountin' i+entities in"ol"in' rates of c&an'eUsee Jor'enson (23;;) for an early +iscussion!
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448
ARTICLE IN PRESS
J! %reenoo+, P! -rusell # Journal of Monetary Economics ] (]]]]) ]]]]]] 22
7ornstein, A!, -rusell, P!, 233;! Can tec&nolo'y im)ro"ements cause )ro+ucti"ity slo+ons! N?ER
Macroeconomics Annual 22, <43<93!
7ornstein, A!, -rusell, P!, <444! T&e IT re"olution* is it e"i+ent in t&e )ro+ucti"ity num.ersC Economic \uarterly
(6e+eral Reser"e ?an: of Ric&mon+) 8;, 53B8!
7ulten, C!R!, 233<! %rot& accountin' &en tec&nical c&an'e is em.o+ie+ in ca)ital! American Economic
Re"ie 8<, 3;5384!
Jor'enson, 0!L!, 23;;! T&e em.o+iment &y)ot&esis! Journal of Political Economy B5, 22B!
-y+lan+, 6!E!, Prescott, E!C!, 238<! Time to .uil+ an+ a''re'ate uctuations! Econometrica 94, 2F592FB4!
Aulton, N!, <44;! In"estment(s)eci c tec&nolo'ical c&an'e an+ 'rot& accountin'! Journal of Monetary
Economics, t&is issue, +oi*24!242;#$!$moneco!<44;!4<!445!
Prescott, E!C!, 238;! T&eory a&ea+ of .usiness cycle measurement! \uarterly Re"ie 24, 3<2!
Solo, R!M!, 239B! Tec&nical c&an'e an+ t&e a''re'ate )ro+uction function! Re"ie of Economics an+ Statistics
F3, F<4F<2!
Solo, R!M!, 23;4! In"estment an+ tec&nical )ro'ress! In* Arro, -!, -arlin, S!, Su))es, P! (E+s!), Mat&ematical
Met&o+s in t&e Social Sciences, 2393! Stanfor+ 1ni"ersity Press, Stanfor+, CA, ))! 83245!
Solo, R!M!, <442! After tec&nical )ro'ress an+ t&e a''re'ate )ro+uction! In* 7ulten, C!, 0ean, E!R!, 7ar)er,
M!J! (E+s!), Ne 0e"elo)ments in Pro+ucti"ity Analysis! T&e 1ni"ersity of C&ica'o Press, C&ica'o, IL,
))! 2BF2B8!
L&elan, -!, <44F! A to(sector a))roac& to mo+ellin' 1!S! NIPA +ata! Journal of Money, Cre+it an+ ?an:in'
F9, ;<B;9;!
Please cite t&is article as* %reenoo+, J!, -rusell, P!, %rot& accountin' it& in"estment(s)eci c
tec&nolo'ical )ro'ress* A!!!! Journal of Monetary Economics (<44;), +oi*24!242;#$!$moneco!<44;!4<!448