The responsibility for the contents of the working papers rests with the author, not the Institute. Since working papers are of a preliminary nature, it may be useful to contact the author of a particular working paper about results or caveats before referring to, or quoting, a paper. Any comments on working papers should be sent directly to the author. Interpreting Productivity Growth in the New Economy: Some Agnostic Notes* The growth rate of total factor productivity seems to have increased recently, at least in the United States. Higher US productivity growth may justify higher stock market valuations than in the past and thus herald an emerging New Economy. However, the size of the estimated growth rate of total factor productivity depends on an assumption about the factor-augmenting properties of technological change. Simulations based on alternative properties of technological change produce a wide range of implied stock market valuations. As long as the rate of technological change cannot be observed directly, justifying the emergence of a New Economy with residual measures of total factor productivity growth will prove to be a futile exercise. JEL: O 4
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