Must-Read: John Fernald: The Pre-Great-Recession Slowdown in U.S. Productivity Growth

Must-Read: I do not understand what John Fernald is getting at here: Who cares if it is not “market” but “home” production? We focus on GDP as a proxy for utility, and we focus on nonfarm business as a proxy for properly-measured GDP, no?

John Fernald: The Pre-Great-Recession Slowdown in U.S. Productivity Growth: “Counting “free” digital goods wouldn’t raise market productivity much…

…Facebook, Google, Tripadvisor, etc. are free… (but advertising supported) digital goods like free radio and TV and advertising-supported print media. Nakamura and Sokoveichik estimate this adds….2 basis points/year to growth! Benefits to consumers (based on value of time, e.g., Brynjolfsson and Oh 2012) are larger. Conceptually, this is home, not market, production (Becker, 1965). Enormous benefits… but not a shift in the market production function…