Relative Prices and Technical Change

  • Dale W. Jorgenson
  • Barbara M. Fraumeni


In this paper our objective is to analyze technical change and the distribution of the value of output for thirty-six industrial sectors of the U.S. economy. Our most important conceptual innovation is to determine the rate of technical change and the distributive shares of productive inputs simultaneously as functions of relative prices. We show that the effects of technical change on the distributive shares is precisely the same as the effects of relative prices on the rate of technical change.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Ben-Zion, U., and V. W. Ruttan: Aggregate Demand and the Rate of Technical Change. Induced Innovation. Ed. by H.P. Binswanger and V.W. Ruttan. Baltimore 1978, 261–275.Google Scholar
  2. Berndt, E.R., and D. W. Jorgenson: Production Structure. U.S. Energy Resources and Economic Growth. Ed. by D.W. Jorgenson and H. S. Houthakker. Chapter 3, Washington 1973.Google Scholar
  3. Berndt, E.R., and D. O. Wood: Technology, Prices, and the Derived Demand for Energy. Review of Economics and Statistics 56 (3), 1975, 259–268.Google Scholar
  4. Berndt, E.R., : Engineering and Econometric Interpretations of Energy-Capital Complementarity. American Economic Review 69 (3), 1979, 342–354.Google Scholar
  5. Binswanger, H.P.: The Measurement of Technical Change Biases with Many Factors of Production. American Economic Review 64 (5), 1974a, 964–976.Google Scholar
  6. Binswanger, H.P.: A Microeconomic Approach to Induced Innovation. Economic Journal 84 (336), 1974b, 940–958.CrossRefGoogle Scholar
  7. Binswanger, H.P.: Induced Technical Change: Evolution of Thought. Induced Innovation. Ed. by H.P. Binswanger and V.W. Ruttan. Baltimore 1978a, 13–43.Google Scholar
  8. Binswanger, H.P.: Issues in Modeling Induced Technical Change. Induced Innovation. Ed. by H.P. Binswanger and V.W. Ruttan. Baltimore 1978b, 128–163.Google Scholar
  9. Burmeister, E., and A.R. Dobell: Disembodied Technological Change with Several Factors. Journal of Economic Theory 1 (1), 1969, 1–8.CrossRefGoogle Scholar
  10. Christensen, L.R., and D. W. Jorgenson: U.S. Real Product and Real Factor Input, 1929–1967. Review of Income and Wealth, Series 16 (1), 1970, 19–50.CrossRefGoogle Scholar
  11. Christensen, L.R., D. W. Jorgenson and L.J. Lau: Conjugate Duality and the Transcendental Logarithmic Production Function. Econometrica 39 (4), 1971, 255–256.Google Scholar
  12. Christensen, L.R., : Transcendental Logarithmic Production Frontiers. Review of Economics and Statistics 55 (1), 1973, 28–45.CrossRefGoogle Scholar
  13. Diewert, W.E.: Exact and Superlative Index Numbers. Journal of Econometrics 4 (2), 1976, 115–146.CrossRefGoogle Scholar
  14. Diewert, W.E.: Aggregation Problems in the Measurement of Capital. The Measurement of Capital. Ed. by D. Usher. Chicago 1980, 433–528.Google Scholar
  15. Fisher, I.: The Making of Index Numbers. Boston 1922.Google Scholar
  16. Fraumeni, B.M., and D. W. Jorgenson: The Role of Capital in U.S. Economic Growth, 1948–1976. Capital, Efficiency and Growth. Ed. by G.M. von Furstenberg. Cambridge 1980, 9–250.Google Scholar
  17. Hicks, J.R.: The Theory of Wages. London 1932.Google Scholar
  18. Hicks, J.R.: The Theory of Wages. 2nd edition. London 1963. Jack Faucett Associates: Development of 35 Order Input-Output Tables, 1958–1974, Final Report. Washington, D.C., 1977.Google Scholar
  19. Jorgenson, D. W.: Technology and Decision Rules in the Theory of Investment Behavior. Quarterly Journal of Economics 87 (4), 1973, 523–543.CrossRefGoogle Scholar
  20. Jorgenson, D. W., and J.-J. Laffont: Efficient Estimation of Non-Linear Simultaneous Equations with Additive Disturbances. Annals of Social and Economic Measurement 3 (4), 1974, 615–640.Google Scholar
  21. Jorgenson, D. W., and L. J. Lau: Transcendental Logarithmic Production Functions. Amsterdam, 1982.Google Scholar
  22. Kennedy, Ch.: Induced Bias in Innovation and the Theory of Distribution. Economic Journal 74 (295), 1964, 541–547.CrossRefGoogle Scholar
  23. Kloek, T.: Indexcijfers: enige methodologisch aspecten. The Hague 1966.Google Scholar
  24. Lau, L.J.: Testing and Imposing Monotonicity, Convexity, and Quasi-Convexity Constraints. Production Economics: A Dual Approach to Theory and Applications, Vol. 1. Ed. by M. Fuss and D. McFadden. Amsterdam 1978, 409–453.Google Scholar
  25. Lucas, R.E., Jr.: Tests of a Capital-Theoretic Model of Technological Change. Review of Economic Studies 34 (98), 1967, 175–180.CrossRefGoogle Scholar
  26. Samuelson, P.A.: Prices of Factors and Goods in General Equilibrium. Review of Economic Studies 21 (1), 1953, 1–20.CrossRefGoogle Scholar
  27. Samuelson, P.A.: A Theory of Induced Innovation Along Kennedy-Weizsäcker Lines. Review of Economics and Statistics 47 (4), 1965, 343–356.CrossRefGoogle Scholar
  28. Samuelson, P.A.: Relative Shares and Elasticities Simplified: Comment. American Economic Review 63 (4), 1973, 770–771.Google Scholar
  29. Schmookler, J.: Invention and Economic Growth. Cambridge 1966.Google Scholar
  30. Theil, H.: The Information Approach to Demand Analysis. Econometrica 33 (1), 1965, 67–87.CrossRefGoogle Scholar
  31. Tornquist, L.: The Bank of Finland’s Consumption Price Index. Bank of Finland Monthly Bulletin 10, 1936, 1–8.Google Scholar
  32. Weizsäcker, C.C.v.: A New Technical Progress Function. Massachusetts Institute of Technology, 1962, unpublished manuscript, 23 pp.Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 1983

Authors and Affiliations

  • Dale W. Jorgenson
  • Barbara M. Fraumeni

There are no affiliations available

Personalised recommendations