THE IMPACT OF ELECTRIC-POWER ON PRODUCTIVITY - A STUDY OF US MANUFACTURING 1950-84

According to the historical record, the increased use of energy in gen eral and electric power in particular stands as one of the key factors in productivity growth. Growth accountants, however, find little supp ort for this view, rejecting claims that the productivity slowdown can be attributed to the lower rate of growth of the energy input in US m anufacturing. In this study, an attempt at reconciling the historical record with the empirical facts is made. Specifically, the commonly us ed factor income shares in the relevant Divisia input-growth index, ar e replaced by the estimated output-input elasticities. The latter attr ibute a considerably larger role to electric power than previous studi es indicated. These are then used to reevaluate the sources of growth in US manufacturing.