Vous consultezCapital Obsolescence, Growth Accounting and Total Factor Productivity

The stability of capital lifespan over time is a key assumption of growth accounting studies. However, many empirical works refute this hypothesis and suggest that the average service-life of capital goods has shown a decrease in the advanced economies since the 1970s. I show in this paper that this acceleration in capital obsolescence could strongly impact on traditional measures of Total Factor Productivity. For instance, a moderate increase in the capital retirement rate since the early 1970s could explain almost all the productivity slowdown observed in the US economy in the period 1974-2000.
JEL Classification: C80, E17, O47.

Keywords
capital obsolescence, total factor productivity, productivity slowdown, mismeasurement hypothesis