
Contents
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7.1 Methods of Estimating Technical Change: Overview 7.1 Methods of Estimating Technical Change: Overview
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7.1.1 The Basic Setup 7.1.1 The Basic Setup
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7.1.2 The Solow-Hall Approach 7.1.2 The Solow-Hall Approach
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7.1.3 Empirical Implementation 7.1.3 Empirical Implementation
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7.1.4 Aggregation 7.1.4 Aggregation
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7.2 The Meaning and Measurement of Capacity Utilization 7.2 The Meaning and Measurement of Capacity Utilization
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7.2.1 A Dynamic Cost-Minimization Problem 7.2.1 A Dynamic Cost-Minimization Problem
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7.2.2 First-Order Approximations 7.2.2 First-Order Approximations
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7.2.3 Second-Order Approximations 7.2.3 Second-Order Approximations
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7.2.4 Capacity Utilization 7.2.4 Capacity Utilization
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7.3 Aggregation Oover Firms 7.3 Aggregation Oover Firms
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7.3.1 The Conversion to Value Added 7.3.1 The Conversion to Value Added
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7.3.2 Aggregation 7.3.2 Aggregation
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7.3.3 Productivity Interpretation of Reallocation Terms 7.3.3 Productivity Interpretation of Reallocation Terms
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7.3.4 The Definition of Technology Change 7.3.4 The Definition of Technology Change
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7.3.5 Externalities 7.3.5 Externalities
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7.4 Data and Method 7.4 Data and Method
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7.4.1 Data 7.4.1 Data
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7.4.2 Estimating Technology Change 7.4.2 Estimating Technology Change
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7.5 Results 7.5 Results
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7.6 Implications for Macroeconomics 7.6 Implications for Macroeconomics
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7.6.1 Productivity as Welfare 7.6.1 Productivity as Welfare
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7.6.2 Reallocations as Propagation Mechanisms 7.6.2 Reallocations as Propagation Mechanisms
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7.7 Conclusions 7.7 Conclusions
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Appendix Derivations from Section 7.3 Appendix Derivations from Section 7.3
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References References
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Comment Comment
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First-versus Second-Order Analysis First-versus Second-Order Analysis
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Top-Down Versus Bottom-Up Top-Down Versus Bottom-Up
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Mismeasurement versus Mismodeling Mismeasurement versus Mismodeling
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Primal versus Dual Primal versus Dual
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Technical versus Market Structure Technical versus Market Structure
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External versus Internal Effects External versus Internal Effects
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Welfare versus Productivity versus Technical Change Welfare versus Productivity versus Technical Change
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7 Why Is Productivity Procyclical? Why Do We Care?
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Published:August 2001
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Abstract
This chapter takes up another theoretical issue that has challenged productivity analysis: the problem of short-run procyclical productivity fluctuations. Conventional analysis regards these fluctuations as a nuisance that obscures long-run movements in total factor productivity (also referred to as multifactor productivity). The chapter treats them as potentially interesting macroeconomic variables that need to be understood in their own rights. Several competing explanations are studied, including procyclical technology shocks, the effects of imperfect competition with increasing returns to scale, variable utilization of inputs over the business cycle, and resource reallocations over the cycle. A commentary is also included at the end of the chapter.
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