Dale W. Jorgenson
Encyclopedia
Dale Weldeau Jorgenson is the Samuel W. Morris University Professor at Harvard University
, teaching in the Department of Economics and John F. Kennedy School of Government
. He served as Chairman of the Department of Economics from 1994 to 1997.
He was a Founding Member of the Board on Science, Technology, and Economic Policy of the National Research Council
in 1991 and served as Chairman of the Board from 1998 to 2006. He also served as Chairman of Section 54, Economic Sciences, of the National Academy of Sciences
from 2000 to 2003 and was President of the Econometric Society
in 1987 and President of the American Economic Association
in 2000.
Jorgenson received the prestigious John Bates Clark Medal
of the American Economic Association
in 1971. This Medal is awarded every two years to an economist under forty for excellence in economic research.
He was also an advocate for a carbon tax
on greenhouse gas
emissions as a means of reducing global warming
when he testified before congress in 1997. His research has also been used to advocate for the FairTax
, a tax reform
proposal in the United States to replace all federal payroll and income taxes (both corporate and personal) with a national retail sales tax
and monthly tax rebate to household
s of citizens and legal resident aliens. However, Jorgenson supports a tax plan of his own design, which he calls Efficient Taxation of Income
, described in his book Investment, Vol. 3: Lifting the Burden: Tax Reform, the Cost of Capital, and U.S. Economic Growth. The approach would introduce different tax rates for property-type income and earned income from work.
Jorgenson is a member of the Royal Swedish Academy of Sciences
.
The predominant role of investment. In 2005 Jorgenson traced the American growth resurgence to its sources in individual industries in his book, Information Technology and the American Growth Resurgence, co-authored with Mun S. Ho and Kevin J. Stiroh. This book employed the framework originated by Jorgenson, Frank M. Gollop, and Barbara M. Fraumeni, but added detailed information about investments in information technology equipment and software. Jorgenson and his co-authors demonstrated that input growth, due to investments in human and non-human capital, was the source of more than 80 percent of U.S. economic growth over the past half century, while growth in total factor productivity accounted for only 20 percent. Jorgenson and Khuong Vu (2005) established similar results for the world economy.
New architecture for the national accounts. Jorgenson and Steven Landefeld, Director of the U.S. Bureau of Economic Analysis, have proposed a new system of national accounts that incorporates the cost of capital for all assets, including information technology equipment and software. The new system is presented in their book with William Nordhaus, published in 2006. In March 2007 Jorgenson's cost of capital was recommended by the United Nations Statistical Commission for incorporation into the United Nations’ 2008 System of National Accounts. Paul Schreyer (2009) has published an OECD Manual, Measuring Capital, to serve as a guide to practitioners. The “new architecture” was endorsed by the Advisory Committee on Measuring Innovation in the 21st Century to the Secretary of Commerce in 2008. Jorgenson (2009) has presented an updated version of the “new architecture” in his Richard and Nancy Ruggles Memorial Lecture to the International Association for Research in Income and Wealth.
The World KLEMS Initiative was established at Harvard University on August 19–20, 2010. This will ultimately include industry-level production accounts, incorporating capital (K), labor (L), energy (E), materials (M) and services (S) inputs, for more than forty countries. Accounts for 25 or the 27 EU members, assembled by 18 EU-based research teams, were completed on June 30, 2008, and are presented by Marcel P. Timmer, Robert Inklaar, Mary O’Mahony, and Bart van Ark (2010). This landmark study also provides industry-level accounts for Australia, Canada, Japan, and Korea, as well as the U.S., based on the methodology of Jorgenson, Ho, and Stiroh (2005). These industry-level production accounts are now included in the official national accounts for Australia, Canada, and five European countries. The World KLEMS initiative will extend these efforts to important emerging and transition economies, including Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Russia, Turkey, and Taiwan.
Welfare measurement. In 1990 Jorgenson presented econometric methods for welfare measurement in his Presidential Address to the Econometric Society. These methods have generated a new approach to cost of living measurement and new measures of the standard of living, inequality, and poverty. This has required dispensing with ordinal measures of individual welfare that are not comparable among individuals, as persuasively argued by Amartya Sen in 1977. Jorgenson and Daniel T. Slesnick have met this requirement by substituting cardinal measures of individual welfare that are fully comparable among individuals. In 1989 Arthur Lewbel
showed how the household equivalence scales proposed by Jorgenson and Slesnick can be used for this purpose.
Evaluation of alternative policies. In 1993 Jorgenson and Peter J. Wilcoxen surveyed this evaluation of energy, environmental, trade, and tax policies, based on the econometric general equilibrium models Jorgenson developed with Ho and Wilcoxen. The concept of an intertemporal price system provides the unifying framework. This system balances current demands and supplies for products and factors of production. Asset prices are linked to the present values of future capital services through rational expectations equilibrium. The long-run dynamics of economic growth are captured through linkages among capital services, capital stocks, and past investments. Alternative policies are compared in terms of the impact of changes in policy on individual and social welfare. This approach was incorporated into the official guidelines for preparing economic analyses by the U.S. Environmental Protection Agency in 2000.
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
, teaching in the Department of Economics and John F. Kennedy School of Government
John F. Kennedy School of Government
The John F. Kennedy School of Government at Harvard University is a public policy and public administration school, and one of Harvard's graduate and professional schools...
. He served as Chairman of the Department of Economics from 1994 to 1997.
He was a Founding Member of the Board on Science, Technology, and Economic Policy of the National Research Council
United States National Research Council
The National Research Council of the USA is the working arm of the United States National Academies, carrying out most of the studies done in their names.The National Academies include:* National Academy of Sciences...
in 1991 and served as Chairman of the Board from 1998 to 2006. He also served as Chairman of Section 54, Economic Sciences, of the National Academy of Sciences
United States National Academy of Sciences
The National Academy of Sciences is a corporation in the United States whose members serve pro bono as "advisers to the nation on science, engineering, and medicine." As a national academy, new members of the organization are elected annually by current members, based on their distinguished and...
from 2000 to 2003 and was President of the Econometric Society
Econometric Society
The Econometric Society is an international society for the advancement of economic theory in its relation with statistics and mathematics. It was founded on December 29, 1930 at the Stalton Hotel in Cleveland, Ohio....
in 1987 and President of the American Economic Association
American Economic Association
The American Economic Association, or AEA, is a learned society in the field of economics, headquartered in Nashville, Tennessee. It publishes one of the most prestigious academic journals in economics: the American Economic Review...
in 2000.
Jorgenson received the prestigious John Bates Clark Medal
John Bates Clark Medal
The John Bates Clark Medal is awarded by the American Economic Association to "that American economist under the age of forty who is adjudged to have made a significant contribution to economic thought and knowledge"...
of the American Economic Association
American Economic Association
The American Economic Association, or AEA, is a learned society in the field of economics, headquartered in Nashville, Tennessee. It publishes one of the most prestigious academic journals in economics: the American Economic Review...
in 1971. This Medal is awarded every two years to an economist under forty for excellence in economic research.
He was also an advocate for a carbon tax
Carbon tax
A carbon tax is an environmental tax levied on the carbon content of fuels. It is a form of carbon pricing. Carbon is present in every hydrocarbon fuel and is released as carbon dioxide when they are burnt. In contrast, non-combustion energy sources—wind, sunlight, hydropower, and nuclear—do not...
on greenhouse gas
Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
emissions as a means of reducing global warming
Global warming
Global warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...
when he testified before congress in 1997. His research has also been used to advocate for the FairTax
FairTax
The FairTax is a tax reform proposal for the federal government of the United States that would replace all federal taxes on personal and corporate income with a single broad national consumption tax on retail sales. The Fair Tax Act would apply a tax once at the point of purchase on all new goods...
, a tax reform
Tax reform
Tax reform is the process of changing the way taxes are collected or managed by the government.Tax reformers have different goals. Some seek to reduce the level of taxation of all people by the government. Some seek to make the tax system more progressive or less progressive. Some seek to simplify...
proposal in the United States to replace all federal payroll and income taxes (both corporate and personal) with a national retail sales tax
Sales tax
A sales tax is a tax, usually paid by the consumer at the point of purchase, itemized separately from the base price, for certain goods and services. The tax amount is usually calculated by applying a percentage rate to the taxable price of a sale....
and monthly tax rebate to household
Household
The household is "the basic residential unit in which economic production, consumption, inheritance, child rearing, and shelter are organized and carried out"; [the household] "may or may not be synonymous with family"....
s of citizens and legal resident aliens. However, Jorgenson supports a tax plan of his own design, which he calls Efficient Taxation of Income
Efficient Taxation of Income
The Efficient Taxation of Income is an approach to taxation that would apply different tax rates for property-type income and earned income from work. Earned income would be taxed at a flat rate of 10%, while property-type income would be taxed at 30%. The plan was created by Dale Jorgenson, Samuel W...
, described in his book Investment, Vol. 3: Lifting the Burden: Tax Reform, the Cost of Capital, and U.S. Economic Growth. The approach would introduce different tax rates for property-type income and earned income from work.
Jorgenson is a member of the Royal Swedish Academy of Sciences
Royal Swedish Academy of Sciences
The Royal Swedish Academy of Sciences or Kungliga Vetenskapsakademien is one of the Royal Academies of Sweden. The Academy is an independent, non-governmental scientific organization which acts to promote the sciences, primarily the natural sciences and mathematics.The Academy was founded on 2...
.
Research
Jorgenson’s 1963 paper, “Capital Theory and Investment Behavior,” introduced all the important features of the cost of capital employed in the subsequent literature. His principal innovations were the derivation of investment demand from a model of capital as a factor of production, the incorporation of the tax treatment of income from capital into the price of capital input, and econometric modeling of gestation lags in the investment process. In 1971 Jorgenson surveyed empirical research on investment in the Journal of Economic Literature. In the same year he was awarded the John Bates Clark Medal of the American Economic Association for his research on investment behavior. In 2011 Jorgenson’s paper was chosen as one of the Top 20 papers published in the first 100 years of the American Economic Review.The predominant role of investment. In 2005 Jorgenson traced the American growth resurgence to its sources in individual industries in his book, Information Technology and the American Growth Resurgence, co-authored with Mun S. Ho and Kevin J. Stiroh. This book employed the framework originated by Jorgenson, Frank M. Gollop, and Barbara M. Fraumeni, but added detailed information about investments in information technology equipment and software. Jorgenson and his co-authors demonstrated that input growth, due to investments in human and non-human capital, was the source of more than 80 percent of U.S. economic growth over the past half century, while growth in total factor productivity accounted for only 20 percent. Jorgenson and Khuong Vu (2005) established similar results for the world economy.
New architecture for the national accounts. Jorgenson and Steven Landefeld, Director of the U.S. Bureau of Economic Analysis, have proposed a new system of national accounts that incorporates the cost of capital for all assets, including information technology equipment and software. The new system is presented in their book with William Nordhaus, published in 2006. In March 2007 Jorgenson's cost of capital was recommended by the United Nations Statistical Commission for incorporation into the United Nations’ 2008 System of National Accounts. Paul Schreyer (2009) has published an OECD Manual, Measuring Capital, to serve as a guide to practitioners. The “new architecture” was endorsed by the Advisory Committee on Measuring Innovation in the 21st Century to the Secretary of Commerce in 2008. Jorgenson (2009) has presented an updated version of the “new architecture” in his Richard and Nancy Ruggles Memorial Lecture to the International Association for Research in Income and Wealth.
The World KLEMS Initiative was established at Harvard University on August 19–20, 2010. This will ultimately include industry-level production accounts, incorporating capital (K), labor (L), energy (E), materials (M) and services (S) inputs, for more than forty countries. Accounts for 25 or the 27 EU members, assembled by 18 EU-based research teams, were completed on June 30, 2008, and are presented by Marcel P. Timmer, Robert Inklaar, Mary O’Mahony, and Bart van Ark (2010). This landmark study also provides industry-level accounts for Australia, Canada, Japan, and Korea, as well as the U.S., based on the methodology of Jorgenson, Ho, and Stiroh (2005). These industry-level production accounts are now included in the official national accounts for Australia, Canada, and five European countries. The World KLEMS initiative will extend these efforts to important emerging and transition economies, including Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Russia, Turkey, and Taiwan.
Welfare measurement. In 1990 Jorgenson presented econometric methods for welfare measurement in his Presidential Address to the Econometric Society. These methods have generated a new approach to cost of living measurement and new measures of the standard of living, inequality, and poverty. This has required dispensing with ordinal measures of individual welfare that are not comparable among individuals, as persuasively argued by Amartya Sen in 1977. Jorgenson and Daniel T. Slesnick have met this requirement by substituting cardinal measures of individual welfare that are fully comparable among individuals. In 1989 Arthur Lewbel
Arthur Lewbel
Arthur Lewbel is the inaugural Patrick Roche Professor of Economics at Boston College, and is known in the fields of applied microeconomics and econometrics...
showed how the household equivalence scales proposed by Jorgenson and Slesnick can be used for this purpose.
Evaluation of alternative policies. In 1993 Jorgenson and Peter J. Wilcoxen surveyed this evaluation of energy, environmental, trade, and tax policies, based on the econometric general equilibrium models Jorgenson developed with Ho and Wilcoxen. The concept of an intertemporal price system provides the unifying framework. This system balances current demands and supplies for products and factors of production. Asset prices are linked to the present values of future capital services through rational expectations equilibrium. The long-run dynamics of economic growth are captured through linkages among capital services, capital stocks, and past investments. Alternative policies are compared in terms of the impact of changes in policy on individual and social welfare. This approach was incorporated into the official guidelines for preparing economic analyses by the U.S. Environmental Protection Agency in 2000.