Further Model-Based Estimates of U.S. Total Manufacturing Production Capital and Technology, 1949-2005

Production capital and technology (i.e., total factor productivity) in U.S. manufacturing are fundamental for understanding output and productivity growth of the U.S. economy but are unobserved at this level of aggregation and must be estimated before being used in empirical analysis. Previously, we developed a method for estimating production capital and technology based on an estimated dynamic structural economic model and applied the method using annual SIC data for 1947-1997 to estimate production capital and technology in U.S. total manufacturing. In this paper, we update this work by reestimating the model and production capital and technology using annual SIC data for 1949-2001 and partly overlapping NAICS data for 1987-2005. The paper represents the authors' views and does not necessarily represent any official positions of the Bureau of Economic Analysis or the Bureau of Labor Statistics. The paper was presented at the CESifo Conference on Productivity and Growth, Munich, Germany, June 22-23, 2007. We thank James Malley for his discussion of the paper at the conference and Sung Ahn for help with an econometric problem. Affiliated as Research Fellow with Center for Financial Studies (CFS), Goethe University, Frankfurt, Germany, and with Center for Economic Studies and Ifo Institute for Economic Research (CESifo), Munich, Germany.