Quantifying Embodied Technological Change

Authors

Plutarchos Sakellaris

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2001-16 | October 1, 2001

We estimate the rate of embodied technological change directly from plant-level manufacturing data on current output and input choices along with histories on their vintages of equipment investment. Our estimates range between 8 and 17 percent for the typical U.S. manufacturing plant during the years 1972-1996. Any number in this range is substantially larger than is conventionally accepted with some important implications. First, the role of investment-specific technological change as an engine of growth is even larger than previously estimated. Second, existing producer durable price indices do not adequately account for quality change. As a result, measured capital stock growth is biased. Third, if accurate, the Hulten and Wykoff (1981) economic depreciation rates may primarily reflect obsolescence.

Article Citation

Wilson, Daniel J., and Plutarchos Sakellaris. 2001. “Quantifying Embodied Technological Change,” Federal Reserve Bank of San Francisco Working Paper 2001-16. Available at https://doi.org/10.24148/wp2001-16

About the Author
Daniel Wilson
Daniel Wilson is a vice president in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Daniel Wilson