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The Measurement of Growth under Embodied Technical Change*

Published online by Cambridge University Press:  17 August 2016

Omar Licandro ,
Javier Ruiz-Castillo  and
Jorge Durán
Omar Licandro*
Affiliation:
European University Institute and FEDEA
Javier Ruiz-Castillo
Affiliation:
Universidad Carlos III de Madrid
Jorge Durán
Affiliation:
Universidad de Alicante
*
European University Institute, Badia Fiesolana, Via dei Roccettini 9, 50016 S. Domenico di Fiesole (FI), ITALY, e-mail : omar.licandro@iue.es.
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Summary

New U.S. evidence from NIPA contradicts some of the well-known Kaldor stylized facts, and call for a reformulation of the modern theory of economic growth. Among these new facts, two must be stressed: A permanent decline in the relative price of durable goods, and a permanent increase in the real equipment to real GDP ratio. To be consistent with these new facts, growth models must include at least two sectors and address the problem of defining aggregate output. In this paper, the economic theory of index numbers is used to define the growth rate of real output in a growth model with embodied technical change. The main findings are: (i) NIPA’s methodology measures growth in accordance with the economic theory on index numbers, and (ii) when the growth rate is measured as in NIPA, the contribution of embodied technical change to per capital GDP growth in the U.S. is 69%, which reinforce the claim that embodied technical change is important for growth.

Résumé

Résumé

De nouvelles statistiques américaines provenant du NIPA contredisent certains des fameux faits stylisés de Kaldor et invitent à une reformulation de la théorie moderne de la croissance économique. Parmi ces faits nouveaux, deux sont à mettre en avant plus particulièrement : une baisse continue du prix relatif des biens durables et une hausse continue du ratio équipement réel sur PIB réel. Pour être en accord avec ces nouveaux faits stylisés, les modèles de croissance doivent inclure au moins deux secteurs et s’attaquer au problème de la définition du produit agrégé. Dans cet article, nous utilisons la théorie économique des nombres-indices pour définir le taux de croissance du produit réel dans un modèle de croissance avec changement technique incorporé. Les principaux résultats sont les suivants : (i) la méthode du NIPA mesure la croissance conformément à la théorie économique des nombres-indices, et (ii) lorsque le taux de croissance est mesuré comme le fait le NIPA, nous trouvons que la contribution du changement technique incorporé à la croissance du PIB par tête aux Etats-Unis est de 69%. Ceci confirme l’hypothèse selon laquelle le changement technique incorporé est important pour la croissance.

Keywords

Embodied technical changeGrowth factsGrowth accountingIndex number theoryO30O41O47Changement technique incorporéFaits stylisés de la croissanceComptabilité de la croissanceThéorie des nombres-indicesO30O41O47
Type
I. Macroeconomics and National Accounting
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 68 , Special Issue 1-2: The New Economy: Implications and Viability , 2002 , pp. 7 - 19
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 2002 

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Footnotes

*

The authors have benefited from comments of Raouf Boucekkine, Fernando del Rio, Berthold Herrendorf, Juan Francisco Jimeno, Michael Reiter and an anonymous referee. We also thank Robert Gordon for his helpful advice on NIRA’s methodology. Finally, Licandro and Ruiz-Castillo acknowledge the financial support of the Spanish Ministry of Sciences and Technology (SEC2000-0260 and SE2000-0173, respectively). Jorge Duran acknowledges financial support from a European Marie Curie fellowship (Grant HPMF-CT-1999-00410) at CEPREMAR

References

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