More on the Productivity Story
By Arnold Kling
The Fed’s Roger W. Ferguson speculates on the sustainability of recent high productivity growth. Ferguson and William Wascher’s article on the subject just appeared in the Journal of Economic Perspectives. The article says,
Productivity booms seem to involve four key ingredients: technological innovation; the willingness and ability of owners and corporate managers to reengineer the internal organization of their firms to take maximum advantage of those innovations; financial sector innovations tailored to the forms of business organization predominating at the time; and a skilled and flexible workforce.
Ferguson and Wascher point out that previous productivity booms have come to an end, in part because innovations became “played out.” I wonder whether we have reached a point where fundamental innovations are following on one another so rapidly that we might not have an interruption to the productivity boom. Perhaps nanotechnology and biotechnology will take off before the computer and communications revolution based on Moore’s Law wears out.
For Discussion. What factors will determine whether the productivity boom continues?