Does the United States Have a Productivity Slowdown or a Measurement Problem?

Byrne, David; Fernald, John G.; Reinsdorf, Marshall

doi:10.1353/eca.2016.0014

Cited by 245 publications

(160 citation statements)

References 31 publications

(63 reference statements)

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“…5 As discussed in Byrne, Fernald, and Reinsdorf (2016), ICT price mismeasurement has been with us for some time, and mismeasurement can only explain a small portion of the "missing output" from the productivity slowdown (see also Syverson 2016). The ICT equipment prices described in and used in this paper were used in Byrne et al (2016), who concluded that mismeasurement of ICT prices cannot explain the recent slowdown in output per hour.…”

Section: Ict Prices and Ict Servicesmentioning

confidence: 84%

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ICT Services and their Prices: What do they tell us about Productivity and Technology?

Byrne

Corrado

2017

FEDS

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This paper reassesses the link between ICT prices, technology, and productivity. To understand how the ICT sector could come to the rescue of a whole economy, we extend a multi-sector model due to Oulton (2012) to include ICT services (e.g., cloud services) and use it to calibrate the steady-state contribution of the ICT sector to growth in aggregate U.S. labor productivity. Because ICT technologies diffuse through the economy increasingly via purchases of cloud and data analytic services that are not fully accounted for in the standard narrative on ICT's contribution to economic growth, the contribution of ICT to growth in output per hour going forward is found to be substantially larger than generally thought-1.4 percentage points per year. One reason why the estimated contribution is so large is that official ICT asset prices are found to substantially understate the productivity of the sector. The model developed in this paper also has implications for the relationship between prices for ICT services and prices for the capital stocks (i.e., ICT assets) used to supply them. In particular, ICT service prices may diverge from asset prices and capture productivity gains from ICT asset management by the sector.

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Section: Ict Prices and Ict Servicesmentioning

confidence: 84%

“…The ICT equipment prices described in and used in this paper were used in Byrne et al (2016), who concluded that mismeasurement of ICT prices cannot explain the recent slowdown in output per hour.…”

Section: Ict Prices and Ict Servicesmentioning

confidence: 99%

ICT Services and their Prices: What do they tell us about Productivity and Technology?

Byrne

Corrado

2017

FEDS

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“…These analyses highlight the roles of slowing labor force growth due to demographics and a slowdown in trend productivity growth. The productivity slowdown in the United States is documented by Byrne et al (2016) and Gordon (2016), and the European productivity slowdown is analyzed in Cette et al (2016).…”

Section: Estimates Of the Output Gap And Trend Gdp Growthmentioning

confidence: 99%

Measuring the Natural Rate of Interest: International Trends and Determinants

Holston¹,

Laubach

Williams

2016

FEDS

173

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U.S. estimates of the natural rate of interest -the real short-term interest rate that would prevail absent transitory disturbances -have declined dramatically since the start of the global financial crisis. For example, estimates using the Laubach-Williams (2003) model indicate the natural rate in the United States fell to close to zero during the crisis and has remained there through the end of 2015. Explanations for this decline include shifts in demographics, a slowdown in trend productivity growth, and global factors affecting real interest rates. This paper applies the Laubach-Williams methodology to the United States and three other advanced economies -Canada, the Euro Area, and the United Kingdom. We find that large declines in trend GDP growth and natural rates of interest have occurred over the past 25 years in all four economies. These country-by-country estimates are found to display a substantial amount of comovement over time, suggesting an important role for global factors in shaping trend growth and natural rates of interest.

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“…Much of that surge reflected gains in hardware production, in part because competition within the semiconductor industry led to the faster introduction of new chips. In the 2000s, the pace of TFP gains in ICT production eased and its share in GDP declined (see Byrne, Fernald, and Reinsdorf, 2016).Hence, the direct contribution of ICT-producing industries fell.In the early 2000s, the contribution of market services industries especially bulged. We define this group as wholesale and retail trade, transportation, information, and business services.…”

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confidence: 99%

The Pre-Great Recession Slowdown in Productivity

Cette¹,

Fernald²,

Mojon³

2015

ERWP

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In the years since the Great Recession, many observers have highlighted the slow pace of productivity growth around the world. For the United States and Europe, we highlight that this slow pace began prior to the Great Recession. The timing thus suggests that it is important to consider factors other than just the deep crisis itself or policy changes since the crisis. For the United States, at the frontier of knowledge, there was a burst of innovation and reallocation related to the production and use of information technology in the second half of the 1990s and the early 2000s. That burst ran its course prior to the Great Recession. Continental European economies were falling back relative to that frontier at varying rates since the mid-1990s. We provide VAR and panel-data evidence that changes in real interest rates have influenced productivity dynamics in this period. In particular, the sharp decline in real interest rates that took place in Italy and Spain seem to have triggered unfavorable resource reallocations that were large enough to reduce the level of total factor productivity, consistent with recent theories and firm-level evidence.Keywords: Productivity Growth; Great Recession; Misallocation; Convergence JEL Codes: D24, E23, E44, F45, O47Please address correspondence to fernaldjg@gmail.com. We thank Fabio Canova, Robert Inklaar, Robert Kolmann, Eric Leeper, Werner Roeger, and seminar participants at several institutions for helpful comments. We also thank Genevieve Denoeux, Andrew Tai and Bing Wang for helpful research assistance. John Fernald thanks the Einaudi Institute for Economics and Finance for hosting him while writing much of the paper. The views in this paper are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of San Francisco, the Banque de France, or anyone else associated with those institutions.Since the Great Recession began in 2007, productivity growth in advanced economies has continually surprised to the downside. 1 A severe downturn and slow recovery could affect productivity through various channels, both cyclical and structural. But, as we emphasize, the slowdown in advanced-economy total factor productivity (TFP) growth was broadly underway prior to the crisis. 2 The pre-Great Recession timing suggests the importance of factors other than just the deep crisis (or ensuing policy changes) itself.To understand the evolution of advanced-economy TFP growth prior to the crisis, we highlight three broad factors that have shaped the global economy in recent decades: Technical change, structural rigidities, and declining real interest rates and abundant credit. Each factor has attracted analysis and attention but they have not, typically, been considered together. For expositional clarity as well as data availability, we focus on a small number of major advanced economies: the U.S. and the four main Euro Area countries (Germany, France, Italy, and Spain).For the United States, which we assume is at the frontier of knowledge, we highligh...

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Does the United States Have a Productivity Slowdown or a Measurement Problem?

Cited by 245 publications

References 31 publications

ICT Services and their Prices: What do they tell us about Productivity and Technology?

ICT Services and their Prices: What do they tell us about Productivity and Technology?

Measuring the Natural Rate of Interest: International Trends and Determinants

The Pre-Great Recession Slowdown in Productivity

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