Abstract
In recent years, measured TFP growth in the US has declined. We argue that two forces contributed to this decline: the mismeasurement of intangible capital, and rising markups. Markups affect input shares, while intangibles omitted from measures of investment affect measured capital growth, each potentially generating downward bias in measured TFP growth. Most importantly, when both forces are simultaneously present, their effects reinforce each other and amplify the downward bias in measured TFP growth. Using input-output data, we estimate that this mechanism could account for one-third to two-thirds of the decline in measured TFP growth.
Original language | English (US) |
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Pages (from-to) | S92-S109 |
Journal | Journal of Monetary Economics |
Volume | 124 |
DOIs | |
State | Published - Nov 2021 |
Funding
This article is part of a Conference Proceedings Supplement sponsored by the Study Center Gerzensee and Swiss National Bank.
Keywords
- Intangible capital
- Markups
- Mismeasurement
- Productivity growth
ASJC Scopus subject areas
- Finance
- Economics and Econometrics