June 24, 2002

Productivity Growth in the 2000s

Another paper put to bed. This one took me twice as long as I wished to say what I wanted to say, and so I only got to say about half of what I wanted. It is remarkable how optimistic about productivity growth I seem to be--am I simply insanely optimistic, or is everyone else not looking hard at the evidence?

I'm sorry I didn't get to write the rest of the paper, about the total-factor-productivity-growth-producing sector. I need to find out what I think someday, and I won't get my thoughts in order until I actually write them down.


Abstract:

A near-consensus sees the cause of the productivity speed-up of the 1990s in the information technology [IT] sector. The pace of invention and innovation in the information technology sector generated real price declines of between ten and twenty percent per year for decades. Increased productivity in the IT capital goods-producing sector coupled with real capital deepening as the quantity of investment bought by a dollar of nominal savings grows have together driven the productivity speed-up of the 1990s.


J. Bradford DeLong (2002, forthcoming), "Productivity Growth in the 2000s," NBER Macroeconomic Annual 2002 (Cambridge: MIT Press).

Full text http://www.j-bradford-delong.net/Econ_Articles/macro_online/delong_macro_annual_2002_fi.pdf

Will this higher level of productivity growth persist? The answer appears to be "probably." The most standard of applicable growth models predict that the social return to IT investment would have to suddenly and discontinuously drop to near zero for the upward jump in productivity growth to reverse itself. More complicated models that focus in more detail on the determinants of investment spending or on the sources of increased total factor productivity strengthen, not weaken, forecasts of productivity growth over the next decade.

Posted by DeLong at June 24, 2002 06:57 PM

Comments

Since you seem to be pretty prolific, I'd like to ask: about how long do you spend on each paper on average?

Posted by: Paul on June 25, 2002 03:04 AM

Sounds interesting, but I do not succeed in downloading the paper.

Posted by: IT-disabled on June 26, 2002 02:51 AM
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