Observational Equivalence between the Malmquist Index and the Solow Residual for the G-7 Countries

No CIRJE-F-354, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This study examines the empirical validity of the equivalence proposition on two productivity indexes, studied by Caves, Christensen, and Diewert (1982). Based on permutation tests, this study shows that the measured Malmquistindex and theSolowresidual areobservationally equivalentfor the U.S., Canada, France, Germany, and Italy. While the Solow residual is predominantly used in the existing macroeconomic studies, ?ndings suggest that the Malmquist index is empirically compatible to the Solow residual.

Date: 2005-07
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