Shifting Trends in Semiconductor Prices and the Pace of Technological Progress

44 Pages Posted: 14 Dec 2006

See all articles by Daniel E. Sichel

Daniel E. Sichel

Wellesley College; NBER

Stephen D. Oliner

American Enterprise Institute

Ana M. Aizcorbe

U.S. Bureau of Economic Analysis (BEA)

Date Written: November 2006

Abstract

This paper examines three questions motivated by previous research on semiconductors and productivity growth: Why did semiconductor prices fall so rapidly in the second half of the 1990s, why has the rate of price decline slowed since 2001, and to what extent are these price swings associated with changes in the rate of advance in semiconductor technology? We show that the price swings are statistically significant and that they reflect changes in both price-cost markups and cost trends. Further analysis indicates that the shift to faster cost declines in the mid-1990s likely corresponded to a speed-up in the pace of advance in semiconductor technology; however, the slower cost declines since 2001 appear not to have been mirrored by a deceleration in technology. Consequently, researchers should be cautious about associating price or cost movements for semiconductors with changes in the pace of underlying technology even over moderately long periods.

Keywords: Semiconductor prices, productivity growth, technological progress, technology trends

JEL Classification: L63, O30, O47

Suggested Citation

Sichel, Daniel E. and Oliner, Stephen D. and Aizcorbe, Ana M., Shifting Trends in Semiconductor Prices and the Pace of Technological Progress (November 2006). FEDS Working Paper No. 2006-44, Available at SSRN: https://ssrn.com/abstract=951415 or http://dx.doi.org/10.2139/ssrn.951415

Daniel E. Sichel (Contact Author)

Wellesley College ( email )

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Wellesley, MA 02181
United States

NBER ( email )

1050 Massachusetts Avenue
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Stephen D. Oliner

American Enterprise Institute ( email )

1150 17th Street, N.W.
Washington, DC 20036
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2024195205 (Phone)

HOME PAGE: http://www.aei.org/scholar/stephen-d-oliner/

Ana M. Aizcorbe

U.S. Bureau of Economic Analysis (BEA) ( email )

1441 L Street NW
Washington, DC 20910
United States

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