[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-297237-105":59,"doc-detail-297237-en":130},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":123,"head_meta":125,"extra_data":127,"updated_unix":129},105,"en","is-equipment-price-deation-a-statistical-artifact-abstract","Is Equipment Price De‡ation a Statistical Artifact? - Abstract","","The paper argues that productivity growth in machine-producing sectors measured using relative equipment price de‡ation will be overstated. The mechanism is traced to methods that rely on marginal cost pricing despite imperfect competition. It develops an endogenous growth model with heterogeneous final-goods producers and monopolistically competing machine suppliers. Capital–skill complementarities match the best machines with the best workers and generate vintage-dependent markups. These markups lead standard approaches to infer spurious technological progress even when none occurs.",{"@graph":69,"@context":122},[70,84,105],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/is-equipment-price-deation-a-statistical-artifact-abstract/297237/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/is-equipment-price-deation-a-statistical-artifact-abstract/297237.png","ImageObject",300,407,{"name":92,"@type":93},"Mary Man","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-10-31","2026-09-18",true,{"@type":102,"interactionType":103,"userInteractionCount":44},"InteractionCounter",{"@type":104},"ViewAction",{"@type":106,"mainEntity":107},"FAQPage",[108,114,118],{"name":109,"@type":110,"acceptedAnswer":111},"Why can equipment price de‡ation-based methods overestimate technological change?","Question",{"text":112,"@type":113},"Because the methods incorrectly depend on marginal cost pricing in settings with imperfect competition, producing vintage-dependent markups that distort measured productivity growth.","Answer",{"name":115,"@type":110,"acceptedAnswer":116},"What model framework is introduced to support the argument?",{"text":117,"@type":113},"An endogenous growth model where heterogeneous final-goods producers choose technologies supplied by monopolistically competing machine suppliers.",{"name":119,"@type":110,"acceptedAnswer":120},"How do capital–skill complementarities affect machine pricing and worker matching?",{"text":121,"@type":113},"They imply that the best machines are marketed to the best workers and sold with the highest markup, tying markups to productivity embodied in machines.","https://schema.org",{"og:url":83,"og:type":124,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":126,"canonical":83},"index,follow",{"doc_id":128,"site_id":62},297237,1789743298,{"code":4,"msg":5,"data":131},{"doc_id":128,"user_id":132,"nickname":92,"user_avatar":133,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":134,"file_id":135,"file_url":136,"file_type":137,"file_size":138,"view_count":44,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":139,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":129,"read_time":144,"preview_page_count":4},7421720224475,"https://ap-avatar.wpscdn.com/davatar_276721f389ce27ea32af1340a28f341c","Is Equipment Price De‡ation a Statistical Artifact?  \nBart Hobijn¤  \nFederal Reserve Bank of New York  \nJuly 2001  \nAbstract  \nI argue that methods using relative equipment price de‡ation to measure productivity growth in machine producing sectors will tend to overestimate the real rate of technological change because they incorrectly rely on marginal cost pricing. In order to illustrate my argument, I introduce an endogenous growth model in which heterogeneous …nal goods producers can choose what technology to use. The various technologies are supplied by monopolistically competing machine suppliers. This market structure, combined with capital skill complementarities, implies that the best machines are marketed to the best workers and are sold at the highest markup. The endogenously determined markups are such that standard methods will tend to overestimate the degree of technological progress in the machine producing sector.  \nkeywords: imperfect competition, price indices, vintage capital.  \nJEL-code: O310, O470, C190 .  \n¤ Correspondence: Federal Reserve Bank of New York. Domestic Research Function.  \n33 Liberty Street, 3rd ‡oor. New York, NY 10045. E-mail: [bart.hobijn@ny.frb.org. The](bart.hobijn@ny.frb.org. The)[ ](bart.hobijn@ny.frb.org. The)views expressed in this paper do not necessarily re‡ect those of the Federal Reserve Bank of New York, nor those of the Federal Reserve System.  \n1 Introduction and motivation  \nMany recent studies argue that one of the main driving forces behind the record economic expansion of the 1990’s is the unprecedented productivity growth in the information technology producing sectors. Virtually all of these studies, including Oliner and Sichel (2000), Gordon (2000), Jorgenson and Stiroh (2000), and Violante, Ohanian, Ríos-Rull, and Krusell (2000) argue that the unprecedented productivity growth in the IT producing sectors is re‡ected in the steady decline of their output prices relative to GDP or consumption goods. Their argument is similar to that of Greenwood, Hercowitzand Krusell (1997), who like to refer to it as investment speci…c technological change. Namely, if the productivity growth rate of the investment goods producing sector is consistently higher than that of the …nal goods producing sector, then this will lead to a steady decline in the relative price of investment goods.  \nTwo of the price indices that are most often referred to in the context of the IT sector are those for computers and semiconductors, which I have plotted in Figure 1 . As can be seen from this …gure the relative prices of computers and semiconductors have dropped an astounding 90% and 60% respectively in the period of January 1991 through July 2001 . If all markets would be perfectly competitive, as is assumed by all growth accounting studies referred to above, then this suggests that productivity growth in the IT producing sectors rapidly outpaces that of the …nal goods sector. This is a big if, however. Because, if these markets would be perfectly competitive then none of the IT producers would be able to make the pro…ts necessary to recoup the expenses they made on research and development of their products. Consequently, it is interesting to explore theoretical models that allow for imperfect competition between the suppliers of di¤erent investment goods.  \nThis is exactly what I do in this paper. I introduce an endogenous growth model in which heterogeneous …nal goods producers can choose what technology to use. The various technologies are supplied by monopolistically competing machine suppliers. This market structure, combined with capital skill complementarities, implies that the best machines are marketed to the best workers and are sold at the highest markup. The endogenously determined markups are positively correlated with the level of productivity embodied in a machine.  \nI use this model to show how in a world where there is no technological progress in the machine producing sector, the met","cbCaimvdk9Lo8066","https://ap.wps.com/l/cbCaimvdk9Lo8066","pdf",589648,39,"English","# Abstract\n# 1 Introduction and motivation\n# 2 Market for machines","[{\"question\":\"Why can equipment price de‡ation-based methods overestimate technological change?\",\"answer\":\"Because the methods incorrectly depend on marginal cost pricing in settings with imperfect competition, producing vintage-dependent markups that distort measured productivity growth.\"},{\"question\":\"What model framework is introduced to support the argument?\",\"answer\":\"An endogenous growth model where heterogeneous final-goods producers choose technologies supplied by monopolistically competing machine suppliers.\"},{\"question\":\"How do capital–skill complementarities affect machine pricing and worker matching?\",\"answer\":\"They imply that the best machines are marketed to the best workers and sold with the highest markup, tying markups to productivity embodied in machines.\"}]","Is Equipment Price De‡ation a Statistical Artifact? - Abstract | PDF",98]