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Changing Technology Trends, Transition Dynamics and Growth Accounting
The technology growth trends that underlie recent productivity patterns are investigated in a framework that incorporates investment-specific technological progress. Structural-break tests and regime-shifting models reveal the presence of a downward shift in TFP growth in the late 1960s and an upward shift in investment-specific technology growth in the mid-1980s. In both cases, these breaks precede the generally-recognized dates of labor productivity growth shifts. Simulations of technology growth shocks in a basic neoclassical model show that induced patterns of capital accumulation are generally consistent with the observed lags between technological advances and changes in productivity growth.