On 9/21/07, Doug Henwood <[EMAIL PROTECTED]> wrote: > On Sep 21, 2007, at 5:39 PM, Eugene Coyle wrote: > > > As long as people keep buying stuff, won't technology, better work > > organization, and other productivity gains keep coming? In other > > words, isn't productivity a function of consumption? > > Much of the work done on that period showed that the acceleration in > productivity after 1995 in the U.S. was the result of higher > investment in computer and communications technology. Some people who > were skeptical of this explanation, like Robert Gordon and me, > eventually came around. If you want to read the research, look for > Gordon, Daniel Sichel, Triplett & Bosworth, Stiroh & Jorgenson, etc. >
If I understand correctly much of the late 90's productivity gains came from the computer industry itself. i.e. businesses buying all those computers were not getting much for it, but the computer industry being dominated so heavily by fixed costs, any additional sales of say a Pentium chip or Oracle software would be almost pure profit thereby generating massive apparent productivity gains. http://www.nber.org/~confer/2001/prods01/stiroh.pdf What is surprising is productivity did not actually drop merely decelerated after the crash. Maybe it has something to do with mass layoffs, or maybe with some real gains from technology like targeted advertising on Google. But I suspect part of the explanation is in the accounting of outsourcing activities. -raghu.
