TY  - JOUR
AU  - Hulten,Charles R.
AU  - Robertson,James W.
AU  - Wykoff,Frank C.
TI  - Energy, Obsolescence, and the Productivity Slowdown
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2404
PY  - 1987
Y2  - October 1987
UR  - http://www.nber.org/papers/w2404
L1  - http://www.nber.org/papers/w2404.pdf
N1  - Author contact info:
Charles R. Hulten
Department of Economics
University of Maryland
Room 3105, Tydings Hall
College Park, MD 20742
Tel: 301/405-3549
Fax: 301/405-3542
E-Mail: hulten@econ.umd.edu

James W. Robertson
E-Mail: jwr@intecon.org

Frank Wykoff
658 Palisades Dr.
Pacfiic Palisades
CA 90272
Tel: 310 454 6897
E-Mail: fwykoff@pomona.edu
AB  - The growth rate of output per worker in the U.S. declined sharply during the 1970's. A leading explanation of this phenomenon holds that the dramatic rise in energy prices during the 1970's caused a significant portion of the U.S. capital stock to become obsolete. This led to a decline in effective capital input which, in turn, caused a reduction in the reduction in the growth rate of output per worker. This paper examines a key prediction of this hypothesis. If there is a significant link between energy and capital obsolescence, it should be revealed in the market price of used capital: if rising energy costs did in fact render older, energy-inefficient capital obsolete, prospective buyers should have reduced the price that they were willing to pay for that capital. An examination of the market for used capital before and after the energy price shocks should thus reveal the presence and magnitude of the obsolescence effect. We have carried out this examination for four types of used machine tools and five types of construction equipment. We did not find a general reduction in the price of used equipment after the energy price shocks. Indeed, the price of used construction equipment - the more energy intensive of our two types of capital - tended to increase after 1973. We thus conclude that our data do not support the obsolescence explanation of the productivity of slowdown.
ER  -