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Measuring and Sustaining the New Economy Report of a Workshop (2002) / Chapter Skim
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Microprocessors and Computers: The Phenomenon of Price Declines
Pages 82-88

The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
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From page 82...
... He pointed out that some of the most promising techniques have nothing to do with hardware but with finding better patterns of discovery algorithms that can reduce algorithmic complexity and speed up problem solving. MICROPROCESSORS AND COMPUTERS: THE PHENOMENON OF PRICE DECLINES Kenneth Flamm University of Texas at Austin Dr.
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From page 83...
... If one adds the assumption that wafer-processing costs remain roughly constant, the result is a minus 37 percent per year compound annual growth rate in the cost of the device. i4Hedonic pricing is a technique used to adjust the raw dollar figure of a price to account for the fact that the priced object changes in values that are not reflected in the price (e.g., computers are constantly improving in power and quality while selling for the same or similar prices)
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From page 84...
... $/million bits DRAM 1 00,000 1 0,000 1 ,000 100 10 1 \ \ \ _ 1970 1975 1980 1985 1990 1995 FIGURE 11 Cost of 1 Million Bits of DRAM.
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From page 85...
... He said that he recently found a rich data set on Intel and AMD microprocessor prices, and he developed an estimated hedonic price index for microprocessors over the period on a monthly basis, from about January 1996 to relatively recently, and compared this with the Producer Price Index (PPI) (Figure 12~.
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From page 86...
... Semiconductors were now the largest manufacturing industry in the United States in terms of value added. Measured by value added (i.e., contribution to U.S.
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From page 87...
... 2/96 to 2/98 -62.3 -46.0 2/98 to 2/99 -69.0 -56.8 2/98 to 4/99 -67.9 -58.6 4/99 to 7/00 -66.8 one four-digit industry was approaching 1 percent and much of this increase has been recent. The latter data points have an element of estimation and were "just a calculation of semiconductor nominal value added as a percentage of GDP," but he suggested it could be added "as another data point in our 'something happened in the l990s' story." The Large Impact of Information Technology on GDP Dr.
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From page 88...
... Countries lacking a basic information technology infrastructure are likely to gain even larger relative benefits from cost declines in information technologies. If the analogy with railroads is sound, he concluded, other countries may look forward to very large benefits in the near future, especially in the developing world.
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Key Terms

  • personal computers
  • performance improvement
  • computer industry
  • value added
  • price declines

  • semiconductor industry
  • microprocessor prices
  • economic historians
  • technological improvement
  • railroad building

  • national income
  • price index
  • surprising price
  • income accounts
  • personal computer

  • proprietary data
  • hedonic studies
  • price deflators
  • industrial classification
  • separating cyclical

  • sharp uptick
  • feature reproduced
  • computing experienced
  • recent decline
  • hedonic price

  • microprocessor diagram
  • noticeable increase
  • promising techniques
  • reduce algorithmic
  • replied affirmatively


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