Identifying Sources of Growth

Bart Hobijn

Abstract

In this paper I propose to identify embodied and disembodied technological change by fitting a simple stochastic vintage capital growth model to postwar aggregate U.S. data. My results suggest that (i) at least two thirds of postwar growth of U.S. per capita GDP is driven by the quality improvement of capital goods, while the rest is due to Hicks neutral technological change, and (ii) quality adjusted capital price indices that were previously used to identify embodied technological change underestimate its importance.

Keywords: stochastic growth, technological change, vintage capital.

JEL-codes: D24, E22, O41

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