Growth, fluctuations and technology in the U.S. post-war economy

Abstract

This paper explores several issues concerning how technology affects growth and fluctuations during several U.S. postwar series. The nature of technology is divided into neutral progress and investment-specific progress. Accounting for several changes in the first and second order moments of these series (the slowdown of productivity in 1974, the moderation of 1984 and the resurgence in productivity after 1994), I find that the contribution of investment-specific progress to growth has increased over time. I also find that neutral progress is crucial in explaining the cyclical component of output (before and after 1984), contrary to results found in related literature. However, the shocks to investment-specific progress have played an increasing role in output and other macroeconomic variables. Finally, I conclude that moderation in the macroeconomic series can be associated with technology. In sum, the quality of technological processes affecting long run growth and fluctuations has changed over the past decades.Productivity growth; Investment-specific technological change; Neutral technological change