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To: Thomas M. who wrote (59008)1/18/2001 12:28:00 AM
From: Moominoid  Read Replies (1) of 436258
 
Again you assume inflation is zero if you say dollar sales are the same so the manufacturer has not become more productive.

The real (inflation adjusted) GDP is the sum of real value added in each industry or each firm. A better computer is more real value. The computer producer has added to the real value produced by the economy.

If the increase in computer power has made the buyer more productive, it will show up in his own sales numbers

Not if a consumer buys the computer or if the computer is exported.

If you do a total factor productivity calculation for the buyer of the computer his inputs have increased in size. Unless he gets an even greater increase in real output his TFP will go down even though the cost of computing power is now lower. To get a TFP increase he has to use every cycle of that increased computer power more effectively. So correctly the increase in value added is attributed to the computer sector.
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