Technology overload? Macroeconomic implications of accelerated obsolescence - research seminar

Greenwich Campus

QM245

In this research seminar, we will hear Seda Basihos present a paper on 'Technology overload? Macroeconomic implications of accelerated obsolescence, which is described in the abstract below. 

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Since the mid-1990s computing revolution, the U.S. economy has exhibited several striking regularities. Following a decade-long boom, labour productivity growth has slowed and fallen below its historical trend. Meanwhile, the labour share has declined sharply. I argue that an exogenous acceleration in capital obsolescence may be one driver of these developments. Evidence from U.S. data suggests a significant rise in the obsolescence rate. I explore this mechanism using an endogenous growth model in which the economy transitions to a new equilibrium with faster obsolescence. Initially, because capital designs become obsolete more quickly, the value of future returns to innovation falls. The economy responds with a temporary productivity boom driven by faster skill accumulation, which partially restores innovation profitability. Over time, however, efficient capital per efficient labour declines. Under factor complementarity, such scarcity increases the instantaneous profitability of creating new designs, redirecting resources from skill creation toward capital innovation. This reallocation lowers labour share and ultimately slows long-run productivity growth, as innovative effort is increasingly channelled into creating designs that do not last long. Under baseline calibration, key model outcomes are largely consistent with observed trends.

Presenter:
Seda Basihos

Dr Seda Basihos is a postdoctoral research fellow in economics at the University of Cambridge (affiliated with King's College). Her primary research fields are macroeconomics, economic growth, and political economy, with a focus on technology and firm dynamics. She is also interested in economic history and development, particularly from the unified growth theory perspective.

Location:
University of Greenwich, Queen Mary Building, QM245

Teams (Online) details:

Meeting ID: 319 421 430 872 5
Passcode: N9eW6W66

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