The twin forces of investment in new and scrapping of old equipment are traditionally supposed to play a large
part in explaining productivity growth. Scrapping cannot in practice be observed directly but can be inferred by
estimating a vintage capital model. When this is done it is found that these forces do indeed have a substantial
role to play in explaining differences between industries in productivity growth rates in the 1960s and 1970s, but
not in the 1980s. The productivity improvement observed in most industries in the 1980s must therefore be
ascribed largely to forces other than new investment and scrapping.
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