Dale Jorgenson's Presidential address to the American Economic
Association (2001) makes a convincing case that accelerated
technological change in the production of semiconductors,
microprocessors in particular, has driven the recent increased
productivity growth in the U.S. economy. But, while semiconductors
now gure prominently in accounts of economic growth, Jorgenson
points out that there is not a fully satisfactory economic model of
the industry that produces them. This paper is our attempt to rise
to Jorgenson's challenge.
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