Growth Accounting with Misallocation: Or, Doing Less with More in Singapore

John Fernald () and Brent Neiman

American Economic Journal: Macroeconomics, 2011, vol. 3, issue 2, 29-74

Abstract: We show that in a two-sector economy with heterogeneous capital subsidies and monopoly power, primal and dual measures of TFP growth can diverge from each other as well as from true technology. These distortions give rise to dynamic reallocation effects that imply technology growth needs to be measured from the bottom up rather than from the top down. Using Singapore as an example, we show how incomplete data can be used to estimate aggregate and sectoral technology growth as well as reallocation effects. Our framework can reconcile divergent TFP estimates in Singapore and can resolve other empirical puzzles regarding Asian development. (JEL E22, E23, E25, O33, O41, O47)

JEL-codes: E22 E23 E25 O33 O41 O47 (search for similar items in EconPapers)
Date: 2011
Note: DOI: 10.1257/mac.3.2.29
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Citations: View citations in EconPapers (52)

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Related works:
Working Paper: Growth accounting with misallocation: Or, doing less with more in Singapore (2010)
Working Paper: Growth Accounting with Misallocation: Or, Doing Less with More in Singapore (2010)
Working Paper: Measuring the Miracle: Market Imperfections and Asia's Growth Experience (2006)
Working Paper: Measuring productivity growth in Asia: do market imperfections matter? (2003)
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