[lbo-talk] Roach: Productivity in the New Economy

Brad DeLong jbdelong at uclink.berkeley.edu
Mon Dec 1 07:55:36 PST 2003



> >Okay, now I'm getting confused. I thought the outsourced labor
>>could not be a cause of the higher domestic productivity numbers,
>>given what is and is not included in the productivity equation.
>>Can somebody clarify this for a noneconomist?
>
>You're right. The output number for productivity calculations is
>based on GDP, so it excludes production overseass by US owned
>companies. The input is based on current employment statistics.

But if the Commerce Department is unable to accurately track overseas goods made by U.S. affiliates when they enter the country, then we are understating imports and overstating productivity.

The problem is that neither Janet Yellen, Paul Krugman, nor I can make this interpretation of Roach's argument work quantitatively.

If Roach has a case, it's that fear of foreign competition is causing speedup... --

Yours,

Brad DeLong



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