Abstract
Baoline Chen and Peter A. Zadrozny (2009)
"Estimated U.S. Manufacturing Production Capital and Technology Based on an
Estimated Dynamic Structural Economic Model"
Production capital and total factor productivity or technology are
fundamental to understanding output and productivity growth, but are
unobserved except at disaggregated levels and must be estimated before being
used in empirical analysis. In this paper, we develop estimates of production
capital and technology for U.S. total manufacturing based on an estimated
dynamic structural economic model. First, using annual U.S. total
manufacturing data for 1947-1997, we estimate by maximum likelihood a dynamic
structural economic model of a representative production firm. In the
estimation, capital and technology are completely unobserved or latent
variables. Then, we apply the Kalman filter to the estimated model and the
data to compute estimates of model-based capital and technology for the
sample. Finally, we describe and evaluate similarities and differences
between the model-based and standard estimates of capital and technology
reported by the Bureau of Labor Statistics.
Last Modified Date: September 25, 2009
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