Investment-specific technological progress: Difference between revisions

Revision as of 14:16, 15 February 2011

Revision as of 18:59, 23 August 2012

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==Introduction==

To model how something is [[Production theory basics|produced]], think of a box that in one end takes in inputs such as [[Labour (economics)|labor]] (employees) and [[Capital (economics)|capital]] (equipment, buildings, etc.) and in another end spits out the [[final good]]. With this picture in mind now one can ask, how does technological progress affect production? One way of thinking is that technological progress affects '''specific''' inputs (arrows going in) such as equipment and buildings. To realize the benefits of such [[technological change]] for production, these inputs must be purchased. So for example, the advent of the [[Integrated circuit|microchip]] (an important technological improvement in computers) will affect the production of [[Ford]] cars only if Ford Motor Co.'s assembly plants (the red box) invest in [[computers]] with microchips (instead of computers with [[punched cards]]) and use them (they are one of the arrows going in the box) in the production of [[Ford Mustang|Mustangs]] (the arrow coming out). As the name suggests, this is ''investment-specific'' technological progress---it requires investing in new [[machines]] or buildings which contain or ''embody'' the latest technology. Notice that the term ''investment'' can be general: not only must a [[business|firm]] buy the new technology to reap its benefits, but it also must invest in training its workers and [[management|managers]] to be able to use this new technology (Greenwood & Jovanovic 2001) .

==Importance==

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==References==

* {{Citation

* {{Citation|surname=Gallawa |given=J. Carlton|title=Who Invented Microwaves| url= http://www.gallawa.com/microtech/history.html| year=2005}}.

| last=Gallawa | first=J. Carlton

* {{Citation | surname1=Gort | given1=Michael|surname2=Greenwood|given2=Jeremy|surname3=Rupert|given3=Peter | title=How Much of Economic Growth is Fueled by Investment-Specific Technological Change? | journal=Economic Commentary, Federal Reserve Bank of Cleveland | year=March 1, 1999 }}.

| title=Who Invented Microwaves

* {{Citation | surname1=Greenwood | given1=Jeremy | surname2=Guner | given2=Nezih | title=Marriage and Divorce since World War II: Analyzing the Role of Technological Progress on the Formation of Households| journal= Economie d’avant garde, Research Report No. 8 University of Rochester| year=2004}}.

* {{Citation|surname=Gallawa |given=J. Carlton|title=Who Invented Microwaves| url= http://www.gallawa.com/microtech/history.html| year=2005}}.

* {{Citation | surname1=Greenwood | given1=Jeremy | surname3=Krusell | given3=Per |authorlink3=Per Krusell |surname2=Hercowitz| given2=Zvi| title=Long-Run Implications of Investment-Specific Technological Change| journal= American Economic Review|volume=87|issue=3| year=1997|pages=342–362}}.

* {{Citation

* {{Citation | surname1=Greenwood | given1=Jeremy | surname2=Jovanovic | given2=Boyan|authorlink2=Boyan Jovanovic | year=2001 | chapter=Accounting for Growth| editor=Charles R. Hulten, Edwin R. Dean & Michael J. Harper | title=New Developments in Productivity Analysis | | publisher=University of Chicago Press | place=Chicago }}.

| last=Gort | first=Michael | last2=Greenwood | first2=Jeremy

* {{Citation | surname1=Greenwood | given1=Jeremy | surname2=Seshadri | given2=Ananth| year=2005 | chapter=Technological Progress and Economic Transformation | editor= Philippe Aghion and Steven N. Durlauf| title=Handbook of Economic Growth| | publisher=Elsevier North-Holland | place=Amsterdam}}.

| last3=Rupert | first3=Peter

* {{Citation | surname1=Greenwood | given1=Jeremy | surname2=Seshadri | given2=Ananth|surname3=Yorukoglu|given3=Mehmet | title=Engines of Liberation| journal= Review of Economic Studies|volume=72|issue=1|year=2005| pages=109–133 }}.

| title=How Much of Economic Growth is Fueled by Investment-Specific Technological Change?

* {{Citation | surname1=Greenwood | given1=Jeremy | surname2=Vandenbroucke | given2=Guillaume |year=2006| chapter= Hours Worked: Long-Run Trends | editor=Lawrence E. Blume, Steven N. Durlauf | title=The New Palgrave Dictionary of Economics| edition=2nd | publisher=Palgrave Macmillian | place=London }}.

| journal=Economic Commentary, Federal Reserve Bank of Cleveland | year=March 1, 1999 }}.

* {{Citation | surname=Krusell | given=Per | title= Investment-Specific R and D and the Decline in the Relative Price of Capital |journal= Journal of Economic Growth|volume=3|issue=2|year=1998| pages=131–141 }}.

* {{Citation

* {{Citation|surname=Lebergott|given=Stanley|title=Manpower in Economic growth: The American Record since 1800|year=1964|publisher=McGraw-Hill Company|Place:New York}}.

| last=Greenwood | first=Jeremy | last2=Guner | first2=Nezih

* {{Citation | surname1=Greenwood | given1=Jeremy | surname2=Guner | given2=Nezih | title=Marriage and Divorce since World War II: Analyzing the Role of Technological Progress on the Formation of Households| journal= Economie d’avant garde, Research Report No. 8 University of Rochester| year=2004}}.

| journal= Economie d’avant garde, Research Report No. 8 University of Rochester| year=2004}}.

* {{Citation

| last=Greenwood | first=Jeremy | last2=Hercowitz | first2=Zvi

| last3=Krusell | first3=Per |authorlink3=Per Krusell

| title=Long-Run Implications of Investment-Specific Technological Change

| journal= American Economic Review | volume=87 | issue=3

| year=1997 | pages=342–362}}.

* {{Citation

| last=Greenwood | first=Jeremy

| last2=Jovanovic | first2=Boyan | authorlink2=Boyan Jovanovic

| year=2001 | chapter=Accounting for Growth

| editor=Charles R. Hulten, Edwin R. Dean & Michael J. Harper

| title=New Developments in Productivity Analysis | | publisher=University of Chicago Press | place=Chicago }}.

* {{Citation

| last=Greenwood | first=Jeremy | last2=Seshadri | first2=Ananth

| year=2005

| chapter=Technological Progress and Economic Transformation

| editor= Philippe Aghion and Steven N. Durlauf

| title=Handbook of Economic Growth

| publisher=Elsevier North-Holland | place=Amsterdam}}.

* {{Citation

| last=Greenwood | first=Jeremy | last2=Seshadri | first2=Ananth

| last3=Yorukoglu | first3=Mehmet

| title=Engines of Liberation

| journal= Review of Economic Studies | volume=72

| issue=1 | year=2005 | pages=109–133 }}.

* {{Citation

| last=Greenwood | first=Jeremy | last2=Vandenbroucke | first2=Guillaume

| year=2006 | chapter= Hours Worked: Long-Run Trends

| editor=Lawrence E. Blume, Steven N. Durlauf

| title=The New Palgrave Dictionary of Economics

| edition=2nd | publisher=Palgrave Macmillian | place=London }}.

* {{Citation

| last=Krusell | first=Per

* {{Citation | surname=Krusell | given=Per | title= Investment-Specific R and D and the Decline in the Relative Price of Capital |journal= Journal of Economic Growth|volume=3|issue=2|year=1998| pages=131–141 }}.

| journal= Journal of Economic Growth | volume=3

| issue=2 | year=1998 | pages=131–141 }}.

* {{Citation

| last=Lebergott | first=Stanley

| title=Manpower in Economic growth: The American Record since 1800

| year=1964 | publisher=McGraw-Hill Company | Place:New York}}.

[[Category:Macroeconomics]]