Working Paper: NBER ID: w10732
Authors: Simon Gilchrist; John C. Williams
Abstract: We consider a neoclassical interpretation of Germany and Japan's rapid postwar growth that relies on a catch-up mechanism through capital accumulation where technology is embodied in new capital goods. Using a putty-clay model of production and investment, we are able to capture many of the key empirical properties of Germany and Japan's postwar transitions, including persistently high but declining rates of labor and total-factor productivity growth, a U-shaped response of the capital-output ratio, rising rates of investment and employment, and moderate rates of return to capital.
Keywords: Vintage Capital; Postwar Growth; Germany; Japan; Capital Accumulation; Technological Change
JEL Codes: D24; E22; N10; O41
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| capital accumulation (E22) | productivity growth (O49) |
| initial capital stock (E22) | high rates of return on capital (G31) |
| capital accumulation (E22) | closing of technology gap (O33) |
| putty-clay nature of capital (E22) | gradual process of capital widening followed by capital deepening (E22) |
| initial productivity growth (O49) | slowing as economy transitions to higher capital-labor ratio (O49) |
| capital accumulation (E22) | U-shaped response of capital-output ratio (E23) |