a dual definition for the factor content of trade and its effect on factor rewards in us manufacturing sector we introduce a dual definition of the factor content of trade fct using the concept of the equivalent autarky equilibrium estimating a symmetric normalized quadratic revenue function for the u s manufacturing sector between 1965 and 1991 we find that the fct for capital is positive while the fct for skilled and unskilled labor is negative suggesting that the leontief paradox is not present then the growth rate of the factor rewards is decomposed to the fct endowments and technological change effects we find that technological change is the most important determinant in explaining wage inequality between skilled and unskilled labor

did bank distress stifle innovation during the great depression we find a negative relationship between bank distress and the level quality and trajectory of firm level innovation during the great depression particularly for r d firms operating in capital intensive industries however we also show that because a sufficient number of r d intensive firms were located in counties with lower levels of bank distress or were operating in less capital intensive industries the negative effects were mitigated in aggregate although depression era bank distress was associated with the stifling of innovation our results also help to explain why technological development was still robust following one of the largest shocks in the history of the u s banking system

broadband adoption and firm productivity evaluating the benefits of general purpose technology we examine the relationship between the deployment of broadband which we classify as a general purpose technology and the productivity of the deploying firms using panel data that comprises information on all the major local exchange carriers in the united states telecommunications industry from 1995 to 2000 this relationship is an important indicator of the economic impact of new technology adoption we provide a comprehensive analysis of the literature on general purpose technologies as well as on the economic consequences of information and communications technology diffusion and develop a framework to empirically assess the impact of broadband deployment on the productivity our results find a positive relationship between broadband deployment and the carriers productivity and suggest that encouraging the deployment of broadband technologies in addition to the benefits to consumers and firms at the receiving end of the new technology create the potential for better technological efficiencies and increased productivity for the deploying firms the benefits can be enhanced as the firms studied operate in two sided markets where the network effects brought about by the multitude of interconnections can be substantial because of possible second order spillovers of productivity copyright 2010 the author 2009 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

information decisions and productivity on board computers and capacity utilization in trucking productivity reflects not only how efficiently inputs are transformed into outputs but also how well information is applied to resource allocation decisions this paper examines how information technology has affected capacity utilization in the trucking industry estimates for 1997 indicate that advanced on board computers obcs have increased capacity utilization among adopting trucks by 13 percent these increases are higher than for 1992 suggesting lags in the returns to adoption and are highly skewed across hauls the 1997 estimates imply that obcs have enabled 3 percent higher capacity utilization in the industry which translates to billions of dollars of annual benefits jel d24 l92 o33 o47

do deployment policies pick technologies by not picking applications a simulation of investment decisions in technologies with multiple applications abstract the role of deployment policies that aim to foster technological change has grown considerably especially in the fields of energy and climate however recent research has shown that the adoption of deployment policies carries the potential of locking in the technology that is most cost effective at the point of policy introduction but may be inefficient in the long term the present paper contributes to the emerging literature on the role of deployment policies in creating path dependency and eventually technology lock in while previous studies focused on the relationship between lock in and the technology specificity of deployment policies this paper introduces a new factor the existence of multiple applications for a technology we argue that this factor is highly relevant for technological lock in and should be considered by policy makers to support our argument we simulate the competition among four stationary battery technologies across energy system applications in an investment simulation model this simulation shows that the degree of competition among technologies differs strongly across applications which corresponds with a highly varying lock in probability hence selecting applications in deployment policies very likely corresponds to selecting technologies we discuss the implications of these results for both policy makers and for the academic debate on deployment policies and technological lock in as well as on technology assessment and governance more generally based on the notion that policies can have different technology specificity levels we develop the idea of the application specificity of policies and provide examples of currently enacted deployment policies that vary in terms of their technology and application specificity

trade policy preferences and factor abundance abstract this paper provides a theoretical and empirical analysis of public opinion towards free trade investigating cleavages both between and within countries we study the distributional effects of trade policy in a neoclassical heckscher ohlin economy with not just two but many input factors in production we demonstrate that the factor price changes induced by trade policy are negatively associated with the factor content of free trade and therefore factor abundance using large scale international survey data we test whether these predicted distributional effects are reflected in the trade policy preferences of workers with different labor market skills in order to isolate the effects of factor abundance from other skill related confounding factors we employ a within skill group estimator that exploits the cross country variation in factor abundance in line with theory the data show that individuals whose skills are in more abundant domestic supply have significantly more positive attitudes towards trade

what happens when agent t gets a computer the labor market impact of cost efficient computer adoption this paper offers a model of how computer technology has changed the labor market demonstrating that wage differentials between computer users and non users are consistent with computers first being introduced in high wage jobs following cost efficiency furthermore skill upgrading occurs following a reemphasis on non routine tasks after adoption the model also reveals that neither differences in computer skills nor complementary skills are needed to explain wage differentials between users and non users skill upgrading and the changing organization and intensity of work finally the predicted effects on the wage structure are consistent with empirical evidence

how would david ricardo have taught the principle of comparative advantage author affiliation andrea maneschi vanderbilt university department of economics nashville tn 37235 usa andrea maneschi vanderbilt edu acknowledgment the present version of this paper has benefitted from the perceptive comments of two anonymous referees for comments and advice on previous versions i am grateful to eric bond mario crucini daniel diatkine roger sandilands bertram schefold and philippe steiner 1 introductionassume that david ricardo s life had extended beyond the age of 51 that he became a professor of political economy in his later years and was invited to lecture on comparative advantage 1 against all odds he displays a remarkable intuition of future developments in economic theory and is able to use the standard tools and graphical techniques found in present day economics textbooks in his lecture ricardo recalls the numerical example contained in his principles of political economy and taxation ricardo 1951b chapter 7 where cloth and wine are traded between england and portugal he reminds his audience that england s exports of cloth embody the labor of 100 men whereas 120 men would be needed to produce its wine imports the corresponding numbers for portugal are 80 for wine exports and 90 for cloth imports england s comparative advantage in cloth is explicitly implied by the numbers 100 and 120 pertaining to its two traded commodities even before ricardo mentions the corresponding numbers for portugal because the amounts of portuguese labor associated with the quantities of wine and cloth actually traded are lower than those of english labor portugal has an absolute advantage in producing both commodities however the fact that 80 120 2this paper aims to present ricardo s illustration of the gains from trade in both algebraic and graphical form using first a linear then a nonlinear model of production section 2 shows how ricardo makes a gradual transition to a complete trade model by quantifying the gains from trade as the amount of labor saved by trade in the case where the two countries transformation curves happen to be linear in section 3 he generalizes his illustration of the gains from trade by using a concave transformation curve in section 4 ricardo proves that the liberalization of trade in wheat raises england s profit rate and reduces rental income and shows these results diagrammatically this effect on profits neglected by contemporary trade textbooks is the second main source of gains from trade section 5 concludes that the resulting representation of the gains from trade does greater justice to ricardo s original trade model than that found in most textbooks 2 the linear ricardian modelafter his painstaking elaboration of diminishing returns to labor leading to the theory of rent in chapter 2 of his principles ricardo would have had little reason to argue that an economy s production possibility frontier is a straight line choosing instead a production structure marked by diminishing returns to labor in agriculture that lead to a concave transformation curve however in this lecture he decides for pedagogical reasons to make a gradual transition to the latter by starting as a temporary working hypothesis with the linear ricardian production model familiar to students of present day textbooks consider the production possibility line be in the left hand quadrant of figure 1 where the horizontal axis measures the quantity of cloth to the left of the origin o and the vertical axis that of wine in the right hand quadrant the horizontal axis measures the workforce in the wine sector lw given a constant labor coefficient in wine production the linear production function oq shows wine output as a function of lw

the dynamo and the computer an historical perspective on the modern productivity paradox the dynamo and the computer an historical perspective on the modern productivity paradox author s paul a david source the american economic review vol 80 no 2 papers and proceedings of the hundred and second annual meeting of the american economic association may 1990 pp 355 361 published by american economic association stable url http www jstor org stable 2006600 accessed 08 12 2010 01 40

the ict electronics question structural change and the rebound effect abstract ict and related electronic appliances consumed 4 of global electrical energy in 2007 growing to 4 7 in 2012 with projections of continued increase in coming decades this is despite an average annual increase in energy efficiency of about 30 in ict electronics throughout the last 5 decades mainstream studies of energy related rebound effects have yet to produce a conceptual framework that adequately encapsulates a unique feature of ict electronics its tendency to induce changes in social practice and socio technical structures this study attempts to fill this gap surveying rebound effect literature it builds on studies which explore transformational change caused by energy efficiency increases it identifies structural changes in business education the military and households caused by energy efficiency increases in ict electronics which lead to a proliferation of ict electronic devices and consequently increased energy consumption it shows the cause and effect logic between energy efficiency and energy consumption in ict electronics and tentatively estimates rebound effects ranging between 115 and 161 in eight diverse empirical examples the history of ict electronics shows that energy efficiency increases inevitably lead to increases in energy consumption hence firm controls on co 2 e emission allowances may offer the best hope of curbing energy consumption and co 2 e emissions in this sector

animal spirits as an engine of boom busts and throttle of productivity growth abstract the news shock literature interprets empirical news shock identifications as signals about future productivity under this view changes in productivity cause changes in expectations i investigate an alternative interpretation whereby changes in expectations cause changes in productivity i present a model where firms adopt the technology of a deterministic frontier and where self fulfilling expectational shocks unleash a frenzy of adoption through which firms increase productivity consistent with the news evidence stock prices and aggregate activity boom yet tfp increases with a lag simulations using i i d expectational shocks yield moments consistent with the data and qualitatively capture both high frequency boom busts and lower frequency fluctuations finally estimating a beaudry portier style vecm on the simulated model output to identify a news shock recovers impulse response functions largely consistent with the beaudry and portier 2006 results

growth deceleration and transaction costs a note abstract the basic hypothesis of this essay is that the bureaucratic nature of the planned economies of east europe meant that they were more vulnerable to the rising transaction costs associated with economic development than market economics if true this suggests that these nations revealed a greater deceleration of economic growth than in the market economies of the west empirical evidence is provided to demonstrated that such a phenomenon did in fact occur

monitoring technology and firm boundaries physician hospital integration and technology utilization abstract we study the relationship between physician hospital integration and its relation to monitoring it utilization we develop a theoretical model in which monitoring it may complement or substitute for integration and test these relationships using a novel data source physician labor market heterogeneity identifies the empirical model we find that monitoring it utilization is increasing in integration implying that expanded firm boundaries complement monitoring it adoption we argue that the relationship between monitoring it and firm boundaries depends upon the contractibility of the monitored information

the general validity of the heckscher ohlin theorem despite a number of attempts to extend it the heckscher ohlin theorem remains woefully restricted in terms of the generality of the assumptions needed for its proof in its traditional form as a statement about the commodity composition of trade the theorem is valid only in the highly abstract environment of the two factor two good twocountry model that has been the mainstay of trade theory for half a century a weaker version of the theorem involving the factor content of trade rather than its commodity composition has been proved for any number of factors goods and countries but this generality has so far been bought only at the cost of other and perhaps equally restrictive assumptions 2 the purpose of this paper is to provide statements and proofs of the heckscher ohlin h o theorem that are more general than those currently available the approach taken is similar to that used in my 1980 article for an extension of the theory of comparative advantage in terms of correlations between autarky prices and trade in section i i lay out the assumptions on which the analysis is based these assumptions provide the outlines of a reasonably general model in which there may be any numbers of goods and factors and in which factor prices may be equalized or not trade impediments in the form of tariffs or export taxes are permitted though transportation costs are not 3 in section ii i discuss the difficulty of inferring the factor content of trade in a world of unequal factor prices and i provide several alternative definitions of that concept for use later in the paper these together with the assumptions of section i are used in section iii to prove a theorem on the value at autarky prices of the factor content of trade in section iv this theorem is used to prove a first corollary that makes a more direct statement about the pattern of trade it says that worldwide there must be a negative correlation between the factor content of trade by factor and country and the corresponding autarky factor prices it is precisely these autarky factor prices that constitute the ohlin measure of factor scarcity therefore the corollary provides a formal statement of the general idea that countries tend to export the services of those factors which they have in relative abundance and it may be regarded as a generalization of the factor content version of the h o theorem finally a generalization of the commodity version of the theorem is proved in section v the concept of a covariance is generalized university of michigan i have benefitted greatly from the comments of paul degrauwe wolfgang mayer michael mussa carl simon and robert stern as well as others who participated in seminars at the universities of michigan chicago and cincinnati and at the national bureau of economic research an anonymous referee also made valuable comments with additional goods and factor price equalization the theorem runs afoul of the indeterminacy of production and trade noted by paul samuelson 1953 and james melvin 1968 without factor price equalization trade impediments and intermediate production can cause reversals of the pattern of trade as shown in my 1979 article if additional factors and countries are also added it becomes difficult even to state the theorem let alone to prove it 2melvin stated such a theorem for the three good two factor case and jaroslav vanek 1968 proved it for the general case but only by assuming factor price equalization trent bertrand 1972 and jon harkness 1979 were able to drop the factor price equalization assumption but replaced it with restrictions on consumption of either goods or factors by country of origin it is unclear to me however that these restrictions can ever be met in a model that is otherwise plausible harkness 1978 has also used the factor content version of the theorems as the motivation for a regression equation relating commodity trade to factor intensities this bears some resemblance to my analysis below in section v see however james anderson 1981 and edward leamer and harry bowen 1981 who have criticized his result with a reply by harkness 1981 3for ease of exposition i do not allow here for transportation costs these were included in an earlier version of this paper following the technique in my 1980 article

an interpretation of the factor content of trade abstract this paper shows that the factor content of trade can be used to indicate effects of trade on relative factor prices factor prices in two trading equilibria can be compared by comparing instead their two equivalent autarky equilibria constructed by changing factor endowments by the factor content of trade using relationships between autarky factor prices and factor endowments several relationships are derived between factor prices with trade and its factor content the most general result is a positive correlation between relative changes in the factor content of trade appropriately normalized and proportional changes in factor prices

earnings differentials and market structure theoretical models suggest that market structure may influence the magnitude of earnings differentials and or discrimination observed in the marketplace empirical results with regard to wage differentials and labor force participation patterns have been mixed most wage differential studies have focused on males due to difficulty in obtaining reliable data for women and to the sample selection problem of women s labor force participation decisions this paper characterizes market structure by four categories regulated nonprofit government and nonregulated industries within these structural categories earnings differentials are examined for men and women adjusting for race occupational stratification and sample selection bias

economic growth and the transition from traditional to modern energy in sweden we examine the role of substitution from traditional to modern energy carriers and of differential rates of innovation in the use of each of these in economic growth in sweden from 1850 to 1950 we use a simple growth model with a nested ces production function and exogenous factor augmenting technological change and carry out a counterfactual simulation based on the econometric results even though the rate of technical change was higher for modern energy innovation in the use of traditional energy carriers contributed more to growth between 1850 and 1890 since the cost share of traditional energy was so much larger than that of modern energy in that period however after 1890 we find that modern energy contributed much more to economic growth than traditional energy but increasingly labor augmenting technological change became the most important single driver of growth

striving for a large market evidence from a general purpose technology in action several scholars have tried to focus on growth accounting of specific examples of general purpose technologies gpts but what are the factors that might make a general purpose technology succeed or fail once the invention has been triggered this paper is a preliminary answer to this question and attempts to study gpts from an ex ante perspective trying to understand what is the behaviour and performance of the producer firms and what the factors are that can favour or hamper their diffusion in the application sectors the paper follows a historical perspective on a control technology introduced in the last few decades by a silicon valley start up company

technological diffusion and asset prices in this paper we demonstrate that the gradual diffusion of technology causes the stock market to exhibit a cyclical behavior more importantly we attribute sharp declines and increases in the stock market such as the ones that occurred in the early 1970s and mid 1990s in the united states to expected rapid technological diffusion

feature it diffusion and industry and labour market dynamics the emergence and rapid diffusion of information and communication technology is the most radical technological transformation of the last couple of decades and has had an enormous economic impact this bundle of four articles contains research that discusses major economic implications of the diffusion of it they focus on two main implications of it i networks and industry dynamics and ii it and workplace organisation the two sets of two articles contribute both original theoretical insights and new empirical results to these themes

ricardo s international trade theory beyond the comparative cost example that the labour embodied in the export goods given in exchange for one unit of the imported good is less than the labour which the country would have to utilise if it itself were to produce one unit of the imported good there is no question that this ricardian model based on the example of england and portugal trading cloth for wine in chapter 7 of ricardo s principles of political economy and taxation 1951a is an excellent pedagogical device to illustrate the role of compara tive advantage in determining a country s trade pattern and the resulting gains from trade ricardo showed that trade enhances a country s welfare even though it may be more efficient than its trading partner in producing each of its commodities as long as its relative productivity advantage differs between them the principle of comparative advantage

a retrospective look at the u s productivity growth resurgence it is widely recognized that information technology was critical to the dramatic acceleration of u s labor productivity growth in the mid 1990s this paper traces the evolution of productivity estimates to document how and when this perception emerged early studies concluded that information technology was relatively unimportant only after the massive information technology investment boom of the late 1990s did this investment and underlying productivity increases in the information technology producing sectors come to be identified as important sources of growth although information technology has diminished in significance since the dot com crash of 2000 and observed growth rates have slowed recently we project that private sector productivity growth will average around 2 4 percent per year for the next decade only moderately below the average of the post 1995 period

embodied technological change learning by doing and the productivity slowdown the productivity slowdown faced by the us economy since the first oil shock has been associated with a rise in the decline rate of the relative price of equipment and a reduction in the rate of disembodied technical change we build up a growth model in which learning by doing is the engine of both embodied and disembodied technological progress a change in the relative efficiency of learning by doing from the consumption to the investment sector is shown to imply a technological reassignment consistent with the above mentioned evidence this result derives from the interaction between the obsolescence costs inherent to embodiment and the learning by doing engine

computer mediated transactions every now and then a set of technologies becomes available that sets off a period of combinatorial innovation think of standardized mechanical parts in the 1800s the gasoline engine in the early 1900s electronics in the 1920s integrated circuits in the 1970s and the internet in the last decade or so the component parts of these technologies can be combined and recombined by innovators to create new devices and applications since these innovators are working in parallel with similar components it is common to see simultaneous invention there are many well known examples such as the electric light the airplane the automobile and the telephone many scholars have described such periods of innovation using terms such as recombinant growth general purpose technologies cumulative synthesis and clusters of innovation the internet and the web are wonderful examples of combinatorial innovation in the last 15 years we have seen a huge proliferation of web applications all built from a basic set of component technologies the internet itself was a rather unlikely innovation i like to describe it as a lab experiment that got loose since the internet arose from the research community rather than the private sector it had no obvious business model other public computer networks such as aol compuserve and minitel generally used a subscription models but were centrally controlled and offered little scope for innovation at the user level the internet won out over these alternatives precisely because it offered a flexible set of component technologies which encouraged combinatorial innovation

the solow productivity paradox what do computers do to productivity 1 you don t see computers everywhere in a meaningful economic sense computers and information processing equipment are a relatively small share of gdp and of the capital stock 2 you only thinkyou see computers everywhere government hedonic price indexes for computers fall too fast according to this position and therefore measured real computer output growth is also too fast 3 you may not see computers everywhere but in the industrial sectors where you most see them output is poorly measured examples are finance and insurance which are heavy users of information technology and where even the concept of output is poorly specified 4 whether or not you see computers everywhere some of what they do is not counted in economic statistics examples are consumption on the job convenience better user interface and so forth 5 you don t see computers in the productivity statistics yet but wait a bit and you will this is the analogy with the diffusion of electricity the idea that the productivity implications of a new technology are only visible witlh a long lag 6 you see computers everywhere but in the productivity statistics because computers are not as productive as you think here there are many anecdotes such as failed computer system design projects but there are also assertions from computer science that computer and software design has taken a wrong turn 7 there is no paradox some economists are counting innovations and new products on an arithmetic scale when they should count on a logarithmic scale

retrospectives on the genius behind david ricardo s 1817 formulation of comparative advantage last year marked the 200th anniversary of ricardo s famous four numbers paragraph on comparative advantage which is one of the oldest analytical results in economics following the lead of james mill 1821 these four numbers have been interpreted as unit labor coefficients this interpretation has provided the basis for the development of the ricardian model from john stuart mill 1852 to eaton and kortum 2002 however if we accept the labor unit interpretation of these numbers ricardo s exposition in his 1817 principles of political economy and taxation makes little logical sense building on sraffa s 1930 interpretation of ricardo s numbers as labor embodied in trade our discussion reveals the amazing simplicity and generality of ricardo s comparative advantage formulation and gains from trade logic

contractual form and market thickness in trucking a central proposition of the transaction costs literature is that firms will substitute more complicated contractual arrangements for simple spot arrangements when transactions involve relationship specific investments i investigate this proposition by testing whether simple spot arrangements are less common when local trucking markets are thin i find that doubling the thickness of the market increases the likelihood that simple spot arrangements govern transactions by about 30 for long hauls i find weaker evidence of relationships between local market thickness and contractual form for short hauls hauls for which quasi rents are particularly small contracts protect quasi rents over a surprisingly large range but they play a less important role as quasi rents decrease

spatial growth and industry age between 1970 and 2000 employment growth across u s counties exhibited very different patterns in manufacturing and services whereas manufacturing employment growth was negatively related to initial manufacturing employment across the entire distribution of counties service employment growth was positively related to initial service employment for intermediate sized counties this paper presents a theory to rationalize these facts local sectoral growth is driven by technological diffusion across space and depends on the age of the sector the theory correctly predicts the relation between county employment growth and initial county employment in manufacturing at the turn of the 20th century

the myth of the biotech revolution an assessment of technological clinical and organisational change abstract this paper argues that despite being widely promoted by academics and consultants the empirical evidence does not support the existence of a biotech revolution nor does the data support the widely held expectations that biotechnology is having a revolutionary impact on healthcare or economic development the revolutionary model is therefore a misleading basis for policy making as it over estimates the speed and extent of any changes in productivity or the quality of therapeutics instead the evidence suggests biotechnology is following a well established incremental pattern of technological change and creative accumulation that builds upon rather than disrupts previous drug development heuristics

the place of entrepreneurship in the economics that might have been it is a familiar observation that entrepreneurship is not easily accommodated within the framework of neoclassical economic theory drawing inspiration from an ancient critique of neoclassicism by veblen q j econ 12 4 373 397 1898 this paper attributes the difficulty to the tension between normative accounts of decision making as in mainstream theory and ideas of causation that are standard in the sciences normative theories naturally privilege the conjectured future over the experienced past in the quest for explanatory factors evolutionary theories elucidate instead the mechanisms of cumulative causation veblen that perpetually produce the present from the past entrepreneurship of the innovative schumpeterian kind seizes opportunities that emerge in complex evolving contexts of technological and institutional change a theory that gives due weight to cumulative causation sheds greater light on these processes than prevailing mainstream theory can and that is a key advantage of an evolutionary theory

paradox lost firm level evidence on the returns to information systems spending the productivity paradox of information systems is is that despite enormous improvements in the underlying technology the benefits of is spending have not been found in aggregate output statistics one explanation is that is spending may lead to increases in product quality or variety which tend to be overlooked in the aggregate statistics even if they increase output at the firm level furthermore the restructuring and cost cutting that are often necessary to realize the potential benefits of is have only recently been undertaken in many firms our study uses new firm level data on several components of is spending for 1987 1991 the dataset includes 367 large firms which generated approximately 1 8 trillion dollars in output in 1991 we supplemented the is data with data on other inputs output and price deflators from other sources as a result we could assess several econometric models of the contribution of is to firm level productivity our results indicate that is spending has made a substantial and statistically significant contribution to firm output we find that the gross marginal product mp for computer capital averaged 81 for the firms in our sample we find that the mp for computer capital is at least as large as the marginal product of other types of capital investment and that dollar for dollar is labor spending generates at least as much output as spending on non is labor and expenses because the models we applied were similar to those that have been previously used to assess the contribution of is and other factors of production we attribute the different results to the fact that our data set is more current and larger than others explored we conclude that the productivity paradox disappeared by 1991 at least in our sample of firms

gpt driven endogenous growth seven years after helpman s 1998 book on general purpose technologies gpts there is a dearth of subsequent models early models employed technically complex dynamic optimising techniques which limited further development we present a model in which sustained growth is driven by a succession of gpts that is technically simpler than the early models yet captures stylised facts that were omitted from them ours has diminishing returns to inputs and endogenous incremental technological changes from r d interrupted by the occasional introduction of new gpts gpts are themselves developed endogenously with payoffs that are subject to uncertainty in magnitude and timing

trend breaks long run restrictions and contractionary technology improvements abstract structural vector autoregressions with long run restrictions are extraordinarily sensitive to low frequency correlations recent literature finds that the estimated effects of technology shocks are sensitive to how one treats hours per capita however after allowing for statistically and economically significant trend breaks in productivity results are much less sensitive hours fall when technology improves the issue is that the common high low high pattern of productivity growth and hours i e the low frequency correlation inevitably leads to a positive estimated response the trend breaks control for this correlation this example suggests a practical need for care in using long run restrictions

innovation and growth through local and global interaction this paper investigates the research and development activity of heterogeneous and rationally bounded firms the latter conduct this activity through in house research and by collecting information originating in other firms spillovers thus research and development activity owes both to independent searching and to interaction diffusing information we study the conditions under which this idiosyncratic effort yields effects that have either local system wise negligible impacts or cumulate to generate significant aggregate ones in the latter case global effects feed back upon the incentive to innovate and therefore on the strength of local interaction as well as on autonomous research efforts it is these dynamic forces that we model we compare cases in which significant aggregate effects do emerge with cases in which they do not and study their outcome on innovation directed investment and on long term growth

the us gains from trade valuation using the demand for foreign factor services about 8 cents out of every dollar spent in the united states is spent on imports what if because of a wall or some other extreme policy intervention imports were to remain on the other side of the us border how much would us consumers be willing to pay to prevent this hypothetical policy change from taking place the answer to this question represents the welfare cost from autarky or equivalently the welfare gains from trade in this article we discuss how to evaluate these gains using the demand for foreign factor services the estimates of gains from trade for the us economy that we review range from 2 to 8 percent of gdp

computers obsolescence and productivity this paper develops a new technique for measuring the effect of computer usage on u s productivity growth standard national income and product accounts nipa measures of the computer capital stock which are constructed by weighting past investments according to a schedule for economic depreciation the rate at which capital loses value as it ages are shown to be inappropriate for growth accounting because they do not capture the effect of a unit of computer capital on productivity this is due to technological obsolescence machines that are still productive are retired because they are no longer near the technological frontier and anticipation of retirement affects economic depreciation using a model that incorporates obsolescence alternative stocks are developed that imply a larger computer usage effect this effect together with the direct effect of increased productivity in the computer producing sector accounted for the improvement in u s productivity growth over 1996 1998 relative to the

on the relation between organisational practices and new technologies the role of time based competition this article studies some aspects of organisation choice while explicitly accounting for the fact that firms compete on the product market firms compete by introducing drastic innovations while organisation choice results from a tradeoff between productive efficiency and reactivity we show that the adoption of information technologies and the choice of reactive organisations are complements via an industry level equilibrium effect this view contrasts with the existing literature which emphasises the existence of similar complementarities at the firm level consistently with our model we find that industry level rather than firm level diffusion of information technologies explains firms organisational practices

the effects of protection on the factor content of japanese and american foreign trade data on pre tokyo round tariffs and ad valorem approximations of nontariff barriers are used in the michigan computational model of world production and trade to calculate changes in commodity trade attributable to protection in japan and the united states data on factor requirements in production are then used to calculate the factor contents of these computed changes in trade results indicate that japanese protection is more distortionary of factor markets in japan and the united states than is american protection and that u s manufacturing labor would be the least likely to gain from trade liberalization in japan and or the united states copyright 1988 by mit press

an alternative demand indicator the non accelerating inflation rate of capacity utilization this article examines the usefulness of the naircu the non accelerating inflation rate of capacity utilization as a demand indicator of inflation for eight european countries so far the naircu has been estimated for the usa only where it serves as a useful indicator for inflation in most european countries deviations from the equilibrium level of capacity utilization influence inflation significantly further the results not only indicate that in more recent periods the naircu has shifted upward indicating higher efficiency of the production process but also that confidence intervals have increased over time reducing the usefulness of the naircu somewhat

growth cycles and market crashes abstract market booms are often followed by dramatic falls to explain this requires an asymmetry in the underlying shocks a straightforward model of technological progress generates asymmetries that are also the source of growth cycles assuming a representative consumer we show that the stock market generally rises punctuated by occasional dramatic falls with high risk aversion bad news causes dramatic increases in prices bad news does not correspond to a contraction of existing production possibilities but to a slowdown in its expansion this economy provides a model of endogenous growth cycles in which recoveries and recessions are dictated by the adoption of innovations journal of economic literature classification numbers o40 g12 o41 o30

does innovation cause stock market runups evidence from the great crash this article examines the stock market s changing valuation of corporate patentable assets between 1910 and 1939 it shows that the value of knowl edge capital increased significantly during the 1920s compared to the 1910s as investors responded to the quality of technological inventions innovation was an important driver of the late 1920s stock market runup and the great crash did not reflect a significant revaluation of knowledge capital relative to physical capital although substantial quantities of influential patents were accumulated during the post crash recovery high technology firms did not earn significant excess returns over low technology firms for most of the 1930s

technology trade and factor prices abstract the view that recent changes in the distribution of income primarily reflect technology rather than trade may be the majority opinion but has been harshly criticized by some trade economists this paper will argue that the critique in fact misses the point essentially because the critics undertake the wrong thought experiments trade volumes are not irrelevant if one poses the question correctly one immediately realizes that small trade volumes are inconsistent with a story that attributes large distributional effects to trade the factor bias of technological change is not immaterial except in the case where such change takes place in a small open economy as opposed to one that can affect world prices and where technical change occurs only in that economy rather than occurring simultaneously in other economies as well since the real situation does not meet either criterion factor bias definitely does matter most surprisingly the much maligned use of a factor content approach to infer the effects of trade on factor prices turns out to be an entirely justified procedure when carefully applied

computer use and productivity growth in us federal government agencies 1987 92 we examine the impact of information technology it on productivity in the public sector econometrically using data from the bls federal productivity measurement program and from computer intelligence infocorp and by interviewing some government officials we estimate a production function for government services that includes it capital as an input and find a strong positive relationship across federal agencies between productivity growth and computer intensity growth during the period 1987 92 controlling for growth in compensation and other outlays per employee and in the number of employees our estimates are consistent with the hypothesis that there are excess returns to it capital

monopoly plant and union effects on worker wages this paper examines the effects of industry concentration plant size and unionization on the wages of blue collar manufacturing workers the author points out that few previous wage studies have included all three of those variables or have employed data sufficiently detailed to test adequately their effect on wages this study using data primarily from the 1977 quality of employment survey demonstrates that concentration plant size and unionization all exercise significant and independent effects on wages

new products quality changes and welfare measures computed from estimated demand systems this paper examines the construction of a price index based on an estimated demand system in principle the method examined can produce a price index that takes account of the introduction of new p

technological change and the stock market tobin s average q has usually been well above 1 but fell below 1 during 1974 1984 our model explains this pattern and reconciles it with unchanging aggregate investment the stock market value in the numerator of q reflects ownership of physical capital and knowledge but the denominator measures just physical capital therefore q is usually above 1 periodic arrivals of important new technologies such as the microprocessor in the 1970 s suddenly render old knowledge and capital obsolete causing the stock market to drop national accounts measures of physical capital miss this rapid obsolescence then q appears to drop below 1 jel e44 o3 o41

the short run price performance dynamics of microcomputer technologies abstract models of technology growth are often conceived in terms of long run trends in performance and price because in general short run parameter stability and even the form of the growth function have proved elusive yet short run growth models are arguably more useful for managers and research scientists because the majority of their decisions are concerned with discretionary spending and operations rather than longer run strategic plans and investments our research explores short run growth in microcomputer technologies by specifying growth models and parameter estimates for six commercially important computer technologies over short time periods with weekly data observations were acquired in a homogeneous market limited to a collection time frame of less than two years data was collected at granular weekly intervals with concurrent tests to determine whether parameters were stable over successively longer intervals conversely candidate growth models from longer strategic planning horizons were tested to determine whether they scaled down to operational planning horizons we found that an exponential model of performance to price growth is supported over short time horizons in all but one microcomputer technology nonvolatile ram the exponential model and technology specific parameter estimates that are valid over short horizons were found to accurately scale up to longer planning horizons we expect our results to contribute to more accurate price performance forecasting at the corporate and product level better decision making concerning inventory management capacity utilization lead and lag times in supply chain operations and efficiency of logistics

a specification test of the heckscher ohlin theory abstract under strong assumptions the heckscher ohlin model predicts not only that factor endowment differences alone determine trade patterns but that they do so in a particularly simple way the factor content of trade should be a linear function of national and world factor endowments the evident empirical shortcomings of this simple relationship need not however imply the more general empirical failure of endowment based trade theories this paper provides empirical evidence consistent with a more general endowment based model by showing that the strong heckscher ohlin relationship excludes important additional channels through which factor endowments affect the pattern of trade

good booms bad booms credit booms usually precede financial crises however some credit booms end in a crisis bad booms and others do not good booms we document that while all booms start with an increase of total factor productivity tfp and labor productivity lp such growth falls much faster subsequently for bad booms we then develop a simple framework to explain this firms finance investment opportunities with short term collateralized debt if agents do not produce information about the collateral quality a credit boom develops accommodatingfirms with lower quality projects and increasing the incentives of lenders to acquire information about the collateral eventually triggering a crisis when the average quality of investment opportunities also grows the credit boom may not end in a crisis because the gradual adoption of low quality projects is not strong enough to induce information about collateral finally we also test the main predictions of the model

procompetitive gains from trade and comparative advantage having made the concepts of pro or anticompetitive output changes precise necessary and sufficient conditions for trade gains are derived under conditions of increasing returns to scale and imperfect competition in a general equilibrium model with any finite number of goods and factors these conditions yield generalizations of the theorems of comparative advantage in goods and implicit factor trade the factor content version of the h o theorem other generalizations can be obtained if one assumes quasihomothetic preferences and that welfare effects are dominated by price rather than income effects copyright 1996 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

does the new economy measure up to the great inventions of the past abstract during the four years 1995 99 u s productivity growth experienced a strong revival and achieved growth rates exceeding that of the golden age of 1913 72 accordingly many observers have declared the new economy to be an industrial revolution even more important than the second industrial revolution of 1860 1900 which made the golden age of productivity growth possible this paper dissects the recent productivity revival subtracts out a cyclical component and concludes that there is no revival of the productivity growth trend in the 88 percent of the private economy lying outside of the durables manufacturing sector the paper explains this surprising finding by pointing to limitations in computers and the internet in comparison with the great inventions of the past

machine replacement and the business cycle lumps and bumps this paper explores investment fluctuations due to discrete changes in a plant s capital stock the resulting aggregate investment dynamics are surprisingly rich reflecting the interaction between a replacement cycle the cross sectional distribution of the age of the capital stock and an aggregate shock using plant level data lumpy investment is procyclical and more likely for older capital further the predicted path of aggregate investment that neglects vintage effects tracks actual aggregate investment reasonably well however ignoring fluctuations in the cross sectional distribution of investment vintages can yield predictable nontrivial errors in forecasting changes in aggregate investment

origins and pathways of innovation in the third industrial revolution this study examines the factors that shaped the long term evolution of the ict industry in sweden 1950 2013 using a new historical microdatabase on actual innovation output the driving forces and technological interdependencies in the third industrial revolution are chronicled the results of this study support some stylized facts about technological interdependencies in general purpose technologies a closely knitted set of industries have provided positive and negative driving forces for the development of ict innovations the historical evolution of gpts can in this perspective be described as a sequence of development blocks

concentration unionism and labor earnings a sample selection approach using a simultaneous equations model of wages and union membership the elasticity of the wage with respect to market concentration is estimated to be approximately 0 2 the estimate uses a large data set and extensive controls to measure concentration s direct effect on the wage an indirect effect through unionization and a feedback effect the indirect effect represents the majority of concentration s effect copyright 1988 by mit press

factor content functions and the theory of international trade this paper introduces the concepts of direct and indirect factor trade utility functions and uses them to derive marshallian and hicksian factor content functions which express the quantities of factors of production embodied in net imports as functions of the exogenous variables facing the economy the properties of these functions are discussed and they are used to derive a number of new results in particular it is shown that in certain circumstances the existence of gains from trade is sufficient for the heckscher ohlin theorem to hold in its factor content form

volatility and slow technology diffusion abstract i study the effects of uncertainty on technology adoption and thereby on volatility and growth i present an analytically tractable model in which i uncertainty about the returns to adoption delays technology diffusion and ii the mean and volatility of output growth are jointly determined in equilibrium i then test the key predictions of the model by studying the introduction of three major information and communication technologies icts computers internet and cell phones i find that countries with more volatile growth rates of real gdp per capita have higher time adoption lags and lower average growth as predicted by the model

cleaning house the impact of information technology monitoring on employee theft and productivity this paper examines how firm investments in technology based employee monitoring impact both misconduct and productivity we use unique and detailed theft and sales data from 392 restaurant locations from five firms that adopt a theft monitoring information technology it product we use difference in differences models with staggered adoption dates to estimate the treatment effect of it monitoring on theft and productivity we find significant treatment effects in reduced theft and improved productivity that appear to be primarily driven by changed worker behavior rather than worker turnover we examine four mechanisms that may drive this productivity result economic and cognitive multitasking fairness based motivation and perceived increases of general oversight the observed productivity results represent substantial financial benefits to both firms and the legitimate tip based earnings of workers our results suggest that employee misconduct is not solely a function of individual differences in ethics or morality but can also be influenced by managerial policies that can benefit both firms and employees this paper was accepted by serguei netessine operations management

distinguished lecture on economics in government lessons from past productivity booms the u s economy has been enjoying substantially faster productivity growth for the past eight years than it did over the preceding two decades from 1995 to 2003 labor productivity rose at an average annual rate of about 3 percent up from an average annual rate of around 1 5 percent between 1973 and 1995 in both 2002 and 2003 output per hour increased more than 4 percent the significance of the improvement since 1995 can hardly be overstated even after one takes into account the possibility that the increases of the past two years in part reflect cyclical influences and thus overstate the underlying trend if productivity were to continue to rise at an average annual rate of 3 percent the standard of living in the united states would double roughly every 24 years if on the other hand productivity growth were to revert to an average annual pace of 1 5 percent a doubling in the standard of living would occur every 47 years a number of observers argue that the present era of robust trend productivity growth will soon come to an end others contend that the potential gains to productivity from the technological advances associated with the computer revolu

the factor content of foreign trade in the factor proportions trade theory the heckscher ohlin theory the factor content of the pattern of trade plays a major role both in theoretical and in empirical investigations it is therefore valuable to identify restrictions on permissible vectors of the factor content of trade which necessarily hold in equilibrium if certain restrictions are empirically testable they can be used for preliminary testing of the theory before a more thorough examination is undertaken or they can be used to reject the theory it is my intention to develop in this paper a set of restrictions on the vectors of the factor content of trade which can be used for these purposes it is well known that autarky commodity prices impose restrictions on possible patterns of trade these restrictions provide a precise prediction of the pattern of trade for a two country two commodity world in the sense that the exporter of a good is readily identifiable from autarky price data as the country with the lower relative price of the good i will start by showing that in the presence of factor price equalisation autarky factor rewards impose restrictions on the factor content of trade patterns which are completely analogous to the restrictions imposed by autarky commodity prices on the commodity patterns of trade this result is in line with the view that in the factor proportions model trade in commodities represents indirect trade in factor services unfortunately these restrictions rely on autarky information and they are therefore not very useful for empirical work in order to overcome this difficulty i explore an alternative approach i argue that common predictions of the factor content of trade flows which are based on post trade observable data the data relevant for empirical studies rely on unnecessarily restrictive assumptions i e the assumption that preferences are homothetic and identical across countries and the assumption of factor price equalisation the assumption of identical homothetic preferences seems to be necessary when factor price equalisation is assumed because in this case there is an indeterminancy in the pattern of production nevertheless the two assumptions taken together imply the same factor content of a country s net import vector from the rest of the world for every equilibrium production pattern however in a many country world the factor content of bilateral trade flows depends on the realised production patterns and they cannot therefore be predicted i will show that in the absence of factor price equalisation which many

technology capital spending and capacity utilization i introduction capacity utilization is a variable of longstanding macroeconomic interest many studies have found it to be a valuable indicator of inflationary pressure for example cecchetti 1995 finds that capacity utilization works as well as or better than other variables in predicting inflation over the next year or two similarly in models of the level of resource utilization above which inflation accelerates the utilization rate does as well as and sometimes better than the unemployment rate in predicting this level 1 this predictive value may reflect capacity utilization s ability to do double duty picking up the extent of slack in both labor and product markets corrado and mattey 1997 however in recent years the capacity utilization and unemployment rates have at times provided different signals about the degree of tightness in resource markets notably in the late 1990s the decline in the unemployment rate below 4 suggested a relatively tight labor market but the capacity utilization rate remained unexpectedly flat figure 1 part of this divergence may be due to effects of technology on capacity utilization as the 1990s saw both an investment boom that broadly increased manufacturing capacity and a shift in the composition of capacity toward high tech machinery and equipment in the 1940s and 1950s manufacturing methods typically involved assembly line production with large scale fixed units of machinery and equipment figure 1 omitted relationships between inputs and outputs were relatively fixed and adjustments in capacity were both costly and slow modern manufacturing methods however build considerable flexibility into the management of capacity technologies like numerically controlled machines programmable controllers and modular assembly make it easier to adjust the level and composition of output at the same time the use of automated design and modular tooling lowers the cost and time needed to expand capacity while the use of advanced technologies is far from universal it is increasingly widespread for example about three quarters of plants in equipment producing industries used at least one advanced technology in 1993 about 30 used five or more 2 with the investment boom that took place in the second part of the 1990s these shares are likely higher now conceptually how these advances in technology would affect capacity utilization is not clear a priori on the one hand flexible manufacturing makes it easier to ramp production up and down this may encourage firms to install a broader margin of excess capacity that is to operate at lower average utilization in order to be able to handle upswings in demand such a strategy would be favored by declining prices of high tech capital which make excess capacity cheap on the other hand automated design and modular tooling make it faster and cheaper for firms to expand capacity this may permit them to reduce the amount of excess capacity they maintain and to operate at higher utilization on average with these two offsetting forces at work determining how advances in technology affect capacity utilization at industry levels is ultimately an empirical question this paper investigates the relationship between capacity utilization and high tech investment for u s manufacturing the next section discusses conceptual considerations in the relationship between technological change capital spending and capacity utilization we show how technological change may lead either to lower average utilization by making it cheaper to hold excess capacity or to higher utilization by making further changes in capacity less costly and time consuming the third section discusses the data and specification used for our study the extent of investment in high tech machinery and equipment has varied importantly across industries and over time thus we use data on 111 manufacturing industries from 1974 to 2000 and panel data techniques to investigate effects of technology on utilization

the demand for monitoring technologies the case of trucking this paper examines the demand for on board computers in trucking distinguishing between their incentive and resource allocation improving capabilities i find that monitoring s incentive benefits are high when perquisite taking is attractive to drivers driver effort is important and verifying drivers actions to insurers is valuable these results are consistent with agency theory and suggest that networking applications will raise the productivity and pay of difficult toevaluate workers i also find that monitoring s benefits are disproportionately resource allocation related when managerial decisions are least constrained this suggests that networking applications monitoring capabilities raise the returns to delegation when resource allocation decisions are routine and lower them when they are not

determinants of the structure of u s foreign trade 1958 1976 abstract the heckscher ohlin model with three direct factor inputs is borne out for u s net exports of manufactures in annual cross section regressions for 1958 1976 the coefficient on unskilled labor became significantly more negative over the period and there is evidence that the negative sign on physical capital may reflect the inclusion of natural resource industries further analysis based upon 1960 and 1970 census years suggests the importance as well of skill and technological variables calculations of the total factor requirements of u s trade uphold the leontief paradox for 1958 but not for 1972

threshold cointegration between inflation and us capacity utilization abstractan analogue to the phillips curve shows a positive relationship between inflation and capacity utilization some recent empirical work has shown that this relationship has broken down when using data after the mid 1980s we empirically investigate this issue using several threshold error correction models we find in the long run a 1 increase in the rate of inflation leads to approximately a 0 0046 increase in capacity utilization the asymmetric error correction structure shows that changes in capacity utilization show significant corrective measures only during booms while changes in inflation correct during both phases of the business cycle with the corrections being stronger during recessions we also find that in the short run changes in the inflation rate do granger cause capacity utilization while changes in capacity utilization do not granger cause inflation the granger causality from inflation to capacity utilization can be interpreted as supporting recent calls made in the popular

the factor proportions model with many nations goods and factors theory and evidence recently several authors have markedly improved our understanding of the factorproportions trade model when there are arbitrarily many goods factors and or nations vanek 1968 appears to be the first rigorously to derive theorems in the spirit of the simple heckscher ohlin h o theory concerning the factor content of a nation s total trade subsequently horiba 1974 has investigated conditions under which vanek s results hold bilaterally for trade among many nations lastly in harkness 1978 i considered the implications of vanek s model for a nation s total but not its bilateral commodity trade nonetheless none of these models nor their implications have been subjected to rigorous empirical tests this paper provides such tests on observed trade patterns among canada the united states and the rest of the world row section i briefly reviews the vanek horiba version of the factor proportions model demonstrating how a nation s total and bilateral net factor service trade flows are linked to her total and bilateral relative factor endowments the implications for direct commodity trade are derived in section ii by extension of my earlier 1978 results section iii deals with problems arising from the absence of some data necessary to empirical implementation of the model section iv presents the results of empirical tests conclusions are found in section v

estimating the armington elasticity the importance of study design and publication bias abstract a key parameter in international economics is the elasticity of substitution between domestic and foreign goods also called the armington elasticity yet estimates vary widely we collect 3524 reported estimates of the elasticity construct 32 variables that reflect the context in which researchers obtain their estimates and examine what drives the heterogeneity in the results to account for model uncertainty we employ bayesian and frequentist model averaging to correct for publication bias we use newly developed non linear techniques our main results are threefold first there is publication bias against small and statistically insignificant elasticities second differences in results are best explained by differences in data aggregation frequency size and dimension third the elasticity implied by the literature after accounting for both publication bias and study quality lies in the range 2 5 5 1 with a median of 3 8

concentration and the inter industry wage structure the israeli manufacturing sector the paper analysis the inter industry wage differentials in the israeli manufacturing sector in conjunction with differences in the degree of competition in the various industries unlike some other studies carried out with us date that did not produce conclusive results this study shows a clear cut positive relationship between wages and the degree of monopolization this result is found both for unskilled and highly skilled workers

the economic impact of canadian university r d abstract canadian university research expenditures and those of graduate students produce a gross static economic impact upon the canadian gross domestic product gdp which considerably overestimates the net static impact of university research moreover the net static impact because it keeps constant the economic structure and the productivity of factors of production does not account for the principal beneficial impact of university research the building of human capital and the transfer of knowledge technology all of this leads to an increase in productivity and thus in the size of the gdp this effect is called the dynamic impact this article besides comparing succinctly the gross impact with the net static impact develops a practical method to measure the dynamic impact of university research in a way this method provides another benchmark besides the peer review to judge the relevance of university r d

blade runner economics will innovation lead the economic recovery according to schumpeterian theories economic expansions are associated with the introduction of successful new products processes and services while depressions are linked to stagnant periods with few innovations can the economic crisis set in motion in 2008 be explained by the inability to innovate and upgrade production and conversely will an economic recovery require a new stream of innovations drawing on the debate which emerged after the 1970s economic crisis this discussion paper tries to assess whether it is likely that the next long term expansion will be linked to a new stream of innovations while most evidence suggests that icts continue to provide the back bone of economic activities there is the prospect that biotechnology will eventually start to fulfil the promise envisaged over 30 years ago in the film blade runner

fiscal policy and entrepreneurship abstract this paper reexamines the effect of expansionary fiscal policy on real gdp in the presence of entrepreneurship when government expenditure partially crowds out private consumption as government expenditure cannot reflect changes in consumers tastes expansionary fiscal policy weakens the social role of firms activities to predict and adapt to idiosyncratic changes in consumers taste i show that expansionary fiscal policy can lower real gdp when idiosyncratic risk and the substitutability of goods are large and when firms have a strong ability to predict changes in consumer tastes i also investigate how expansionary fiscal policy influences firms investments in prediction ability

the true meaning of david ricardo s four magic numbers abstract the four numbers in david ricardo s example of comparative advantage have been traditionally interpreted as unit labor coefficients in the production of wine and cloth in uk and portugal a recent interpretation suggests that they represent instead the labor needed to produce the amounts of wine and cloth actually traded ricardo s four numbers are shown to yield each country s gains from trade by simply subtracting two of the numbers from the other two since the numbers also indicate each country s comparative advantage ricardo established a close connection between comparative advantage and the gains from trade

oligopolistic competition it use for product differentiation and the productivity paradox abstract empirical studies suggest that the huge investment in information technologies it of the past two decades has led to no significant increase in productivity this phenomenon is known as the productivity paradox it has been argued that the paradox might result from oligopolistic competition because of strategic interaction each individual firm might find it profitable to invest in cost reducing it but total investment might then be excessive from the industry s point of view i confirm this view and strengthen it by allowing it investment to be also devoted to product differentiation which makes the productivity paradox more likely the emergence of web based electronic commerce provides an illustration of the forces identified in the model

capacity utilization revisited software control and the growth of large technical systems this paper explains how a class of it intensive capital goods called control systems are used to co ordinate the flow of goods traffic materials funds services or information through complex supply production or distribution systems the paper examines how they increase productivity by improving the utilization of installed capacity creating economies of system that are distinct from the traditional economies of scale speed and scope the paper explains which sectors they are important in and how innovation in control technologies relates to architectural changes in large technical systems it is illustrated by case studies of four very different sectors elevators retailing telecommunications and investment banking while control systems improve efficiency and enable product innovation they also create reliability problems and can alter the social distribution of risk

secular stagnation a supply side view secular stagnation on the supply side takes the form of a slow 1 6 percent annual growth rate of us potential real gdp roughly half the 3 1 percent annual growth rate of actual real gdp realized from 1972 to 2004 this slowdown stems from a sharp decline in the growth rate of aggregate hours of work and of output per hour this paper attributes the productivity growth decline to diminishing returns in the digital revolution that had its peak effect business hardware software and best practices in the late 1990s but has resulted in little change in those methods over the past decade

collective invention during the british industrial revolution the case of the cornish pumping engine in this paper we argue that together with individual inventors and firms what robert c allen 1983 has termed as collective invention settings that is settings in which rival firms freely release each other pertinent technical information were also a crucial source of innovation in the industrial revolution period until now this has been very little considered in the literature this paper focuses on one of these cases the cornish mining district in cornwall during the early nineteenth century a notable collective invention setting gradually emerged this case is particularly remarkable because it was capable of generating a continuous and sustained flow of improvements in steam pumping technology which in the end greatly contributed to improve the thermodynamic efficiency of the steam engine in this paper we study in detail the specific economic circumstances that led to the formation of this collective invention setting and we analyses its consequences for the rate of technological innovation

business groups and the natural state abstract recent revisionist accounts of corporate governance in both business history and finance are challenging the tradition narrative associated with berle and means 1932 and chandler 1977 in which the american model of diffuse ownership and coherent diversification is both an inevitable outcome of economic development and perhaps a normative standard for the world to follow this essay is an attempt to rethink that narrative in light of the continued significance of the pyramidal business group as a governance structure around the world i argue that business groups arise in response both to inadequacies in arm s length markets and to the needs of what north et al 2009 call the natural state in this view the quality of markets and the demands of the state are tightly interconnected phenomena such a perspective explains the emergence of business groups in developing countries as well as their persistence even in wealthy and sophisticated polities apart from the u s and the u k in the end moreover i endorse the view that the much discussed and oft misunderstood exceptionalism of the u s in corporate governance arises not only from the sophistication of american markets but also importantly from government policies toward corporate taxation and securities regulation policies that arose from the unique public choice problem posed by the differential effect on the u s of the collapse of globalization during the middle years of the twentieth century

path dependence and the korean keyboard abstract this paper recounts the evolution of the korean keyboard as a case in which the disadvantages of the inherited standard turn into a nonissue with the advancement of auxiliary technologies the persistence of an inherited standard when a superior alternative is available is usually regarded as market failure however if the transition costs to the new standard are such that the net gains from the transition are insufficient the situation is unfortunate but not market failure the situation may change over time if the net gain from the alternative standard increases or transition costs to new alternative decrease or both the situation turns into one in which entrepreneurs can profit by making the transition where appropriate an institutional reform may lower transition costs substantially this paper suggests an additional possibility of technological changes that make the transition unnecessary in the case of the korean keyboard changes in auxiliary technologies have rendered the disadvantages of the inherited standard innocuous the case provides a cautionary tale against the temptation to drastically alter a seemingly hopelessly inferior inherited standard the lesson of the korean keyboard applies to japanese and chinese keyboards with even greater force

factor prices and the factor content of trade revisited what s the use abstract this paper examines and extends a result of deardorff and staiger an interpretation of the factor content of trade journal of international economics 1988 24 93 107 d s who showed how the factor content of trade may indicate the factor price adjustments that can be attributed to that trade it elaborates on what this means and also extends it beyond several of the assumptions that d s used the strongest result in d s only for cobb douglas technology is extended to common constant elasticities of substitution and for small changes more general technologies also the assumption of nonspecialization is shown to be unnecessary with cobb douglas technology more generally noncompeting imports equate with hicks neutral technological improvements

analyzing the relationships between information technology inputs substitution and national characteristics based on ces stochastic frontier production models abstract this research examines four interrelated issues at the country level the value of information technology it inputs substitution and complement the complementarity phenomenon created by it and national characteristics and the productivity paradox jointly and critically from a global perspective using the so called productive efficiency as the performance measure to that end we develop the three factor constant elasticity of substitution ces stochastic production frontier model and apply it to a set of panel data from 15 countries over the period 1993 2003 along with the traditional two factor ces models within the one and two equation frameworks in the two equation setting six national characteristics are selected as the contributing factors of the productive efficiency the findings include i the value of it as measured by the productive efficiency is duly recognized ii the productivity paradox is found to be absent from the production process in a majority of developed and developing countries considered rejecting the existing argument that the paradox exists only in developing economies but does not exist in developed countries however the developed countries have used it capital in their production systems more productively efficiently than the developing nations iii traditional capital non it capital traditional labor and it capital are not pairwise substitutable contrary to the notion that they are pairwise substitutable at the firm level iv constant returns to scale as commonly assumed are not supported by the data v different national characteristics affect a country s output represented by gross domestic product or gdp and its productive efficiency differently and vi the complementarity phenomenon is observed in most of the countries developed and developing under study

computing productivity firm level evidence we explore the effect of computerization on productivity and output growth using data from 527 large us firms over 1987 1994 we find that computerization makes a contribution to measured productivity and output growth in the short term using one year differences that is consistent with normal returns to computer investments however the productivity and output contributions associated with computerization are up to five times greater over long periods using five to seven year differences the results suggest that the observed contribution of computerization is accompanied by relatively large and time consuming investments in complementary inputs such as organizational capital that may be omitted in conventional calculations of productivity the large long run contribution of computers and their associated complements that we uncover may partially explain the subsequent investment surge in computers in the late 1990s