- 8.1.1 Capital calculations As noted in Section 4.2, measured business capital growth, â ln k, could be overstated during the pandemic because of the need to purchase duplicative capital to equip remote workers. To assess the magnitude of this effect, we compare the capital data produced as of July 28, 2022âwhich run through the second quarter of 2022âwith the the implied growth rate based on pre-pandemic investment forecasts. We use pre-pandemic investment forecasts from February 2020 by IHS/Markit forecast (formerly Macroeconomic Advisers).
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- 8.2 Industry productivity To create a quarterly industry dataset on value added per hour, used in Section 4.3, we combine quarterly BEA data on GDP by industry (in real and nominal terms) with BLS data on aggregate weekly hours of all employees. The hours data are available monthly back to March 2006 and are in thousands of hours at a weekly rate. GDP by industry is in millions, at an annual rate. We first convert the monthly hours data to quarterly by averaging across months of the quarter; we then convert to millions at an annual rate as (52 Ã Agg. weekly hours/1000). These data were downloaded from Haver Analytics on July 8, 2022.
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- Of course, this was just one four-quarter period. We estimate that for all of 2020 and 2021, the overstatement of capital from duplicative IT capital was about 2/10ths percent.
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- Some of the decline in business-owned capital input was obscured by the need to duplicate capital for remote workers. Businesses spent heavily to provide teleworkers with the equipment they require to do their jobs. For example, investment in computers and peripheral equipment rose 35 percent from the first quarter of 2020 through the first quarter of 2021; investment in other information processing equipment rose 22 percent. This surge in investment translated into (share-weighted) IT capital growth of 7.4 percent over this period (lagged one quarter, since capital is assumed to become productive with a one-quarter lag). This compares with growth of only 2.3 percent implied by IHS/Markitâs pre-pandemic forecast. With a share in capital input of 9 percent, this translates into an overstatement over this period of 0.4 percentage points in the contribution of IT capital (assuming all of the additional spending was duplicative).
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