Modeling and measuring technical change and productivity growth

In this dissertation, the microtheoretic measurement of technical change (TC) is developed as an alternative to the index number approach to total factor productivity (TFP) growth, incorporating recent theoretical developments in dynamic cost functions that shed light on the effects and role of quasi-fixed factors in the short-run of manufacturing.The main purpose of Chapter III is to provide a systematic overview of technical change and productivity growth by reinterpreting the theoretical identities of TC and TFP growth. Chapters IV and V develop the parametric measures of technical change, focusing on the two distinguishing features of capital: dynamic adjustment of capital and capital vintage. The primary purpose of chapter IV is to generalize the internal adjustment cost framework by considering the alternatives of external, combined, and mixed adjustment costs and to estimate the parametric measure of technical change from the integrated framework of dynamic factor demand. The main objective of chapter V is to estimate embodied technical change by utilizing the factor-augmenting translog specification and the stylized alternative neutrality hypotheses and to decompose the total embodied technical change into several types of induced technical change.The technical change equation, derived from the dynamic factor demand system, yields the parametric estimates for technical change of the assumed cost function. How the underlying cost function is specified directly determines the specific features of technical change. A thorough understanding and robust measurement of technical change is important to economists and policy-makers because it provides an efficient measure of international competitiveness in the open economy.U of I OnlyETDs are only available to UIUC Users without author permissio