We study whether technology gains in sectors related to Information and Communications Technology (ICT) increase productivity in the rest of the economy. To separate exogenous gains in ICT from other technological progress, we use the relative price of ICT goods and services in a structural VAR...

We generalize the normalized Constant Elasticity of Substitution (CES) production function by allowing the elasticity of substitution to vary isoelastically with (i) relative factor shares, (ii) marginal rates of substitution, (iii) capital-labor ratios, or (iv) capital-output ratios. Ensuing...

Using U.S. data over the period 1961 - 2000 we estimate a structural factor-augmented vector autoregressive model and find that a one standard deviation shock to macroeconomic uncertainty generates declines in state-level total factor productivity (TFP) growth that range from -0.15 to -0.98...

We show theoretically and empirically that standard methods give downward biased estimates of productivity growth if technical change is factor-biased. We show how to correct for this bias and construct more reliable measures of the productivity gains from technical progress. We consider two...

Capital costs are not directly observed since most firms own part of their capital stock. I show how cross-sectional variation in firms' input choices reveals the user cost of capital. Estimating the model using Compustat data, I find that capital costs as a share of output have been declining....

I estimate the elasticity of GDP with respect to aggregate capital and labor using industry-specific cost structures and without assuming an aggregate production function exists. Different assumptions about industry capital costs provide upper and lower bounds for the elasticities. In the U.S....

We provide industry-level estimates of the elasticity of substitution (σ) between capital and labor in the US economy. We also estimate rates of factor-augmentation. Aggregate estimates are produced using the same data. Our empirical model comes from the first-order conditions associated with a...

We derive the aggregate normalized CES production function from idea-based microfoundations where firms are allowed to choose their capital- and labor-augmenting technology optimally from a menu of available technologies. This menu is in turn augmented through factor-specific R&D. The considered...

From an engineering perspective, a capital good’s service is energy conversion - e.g., the physical 'work' done by a machine - and can thus be measured directly by the energy consumed in production. We show important empirical advantages of our concept over traditional measures. The empirical...

We analyze the effects of automation and education on economic growth and inequality in an R&D-based growth model with two types of labor: high-skilled labor that is complementary to machines and low-skilled labor that is a substitute for machines. The model predicts that innovation-driven...