Decomposition of Output Growth in the Presence of Input Quality: A Stochastic Frontier Approach

Yasmina Rim Limam, Stephen Miller and Giampaolo Garzarelli
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Yasmina Rim Limam: Faculté des Sciences Économiques et de Gestion de Nabeul and Institutions and Political Economy Group (IPEG), University of the Witwatersrand

No 2016-13, Working papers from University of Connecticut, Department of Economics

Abstract: How do physical capital accumulation and Total Factor Productivity (TFP) individually add to economic growth? We approach this question from the perspective of the quality of both labor and physical capital, namely human capital and the age of physical capital. We build a unique dataset by explicitly calculating the age of physical capital for each year of our time frame and estimate a stochastic frontier production function incorporating input quality in five groups of countries (Africa, East Asia, Latin America, South Asia, and West). Quality of capital significantly and positively affects output growth in three groups. The decomposition of output growth demonstrates that factor growth generally proves much more important than either the improved quality of factors or TFP growth in explaining output growth.

Keywords: Age of Physical Capital; Growth Accounting; Output Growth; Technical Efficiency (search for similar items in EconPapers)
JEL-codes: F43 O47 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2016-09
New Economics Papers: this item is included in nep-eff
Note: Yasmina Rim Limam is the corresponding author
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2016-13

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