Capital-goods imports, investment-specific technological change and U.S. growth

Investment-specific technological progress as reflected by the decline in the relative price of U.S. capital goods has substantially contributed to U.S. postwar growth. Imports of capital goods have represented an increasing share of U.S. equipment investment, and their price relative to U.S. capital goods has declined. We examine the quantitative contribution of the decline in the relative price of imports of capital goods to U.S. growth by assessing to what extent this decline can account for the decline in the relative price of capital goods in the U.S. We find that decline in the relative price of imports of capital goods has accounted for nearly 20 percent of U.S. growth during the last forty years.