Existing advances in technology from smartphones to new car services affect our everyday lives. Yet aggregate productivity has been growing very sluggishly. In 2016 and 2017, for example, output per hour in the U.S. non-farm business sector rose by less than 1 percent per year on average.
The disconnect between productivity growth and the technology revolution has triggered a sharp debate in economics. A scintillating new paper by Adair Turner of the Institute for New Economic Thinking suggests that rather than presenting a puzzle, the combination of technological innovation and low measured productivity growth is exactly what we should expect.
Before turning to Lord Turner's argument, it's worth revisiting previous attempts to resolve the apparent puzzle.
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