Working Paper: NBER ID: w10627
Authors: Diego Comin
Abstract: This paper presents a new approach to assess the role of price mismeasurement in the productivity slowdown. I invert the firm's investment decision to identify the embodied and disembodied components of productivity growth. With a Cobb-Douglas production function, output price mismeasurement only should affect the latter. Contrary to the mismeasurement hypothesis, I find that in the Post-War period, disembodied productivity grew faster in the hard-to-measure than in the non-manufacturing easy-to-measure sectors, and that disembodied productivity slowed down less in the hard-to-measure than in the easy-to-measure sectors since the 70's. These results hold a fortiori when capital and labor are complements.
Keywords: No keywords provided
JEL Codes: C6; D9; E2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| output price mismeasurement (E30) | disembodied productivity growth (O49) |
| output price mismeasurement (E30) | embodied productivity growth (O49) |
| disembodied productivity growth in hard-to-measure sectors (O49) | disembodied productivity growth in easy-to-measure sectors (O49) |
| worsening of mismeasurement problems in hard-to-measure sectors (E01) | productivity slowdown since the 1970s (O49) |