The Dutch Growth Accounts: Measuring Productivity with Non-Zero Profits

Mark Haan, Erik Veldhuizen, Murat Tanriseven and Myriam Rooijen-Horsten

Review of Income and Wealth, 2014, vol. 60, issue S2, S380-S397

Abstract: Since 2007 Statistics Netherlands has been publishing multifactor productivity statistics at the macro and industry branch level. Updates of these statistics are annually released in StatLine, the online statistical database of Statistics Netherlands. In contrast to most other growth accounting exercises, the official growth accounts of Statistics Netherlands employ an exogenous rate of return to capital to calculate capital services. As a consequence, in the Dutch Growth Accounts output does not necessarily match total production costs. Supplementary to the exogenous model, Statistics Netherlands also publishes growth accounts based on endogenous rates of return. The aim of this paper is to investigate the effects of scaling up capital measurement on input cost shares, contributions to output growth, and productivity, applying both the exogenous and endogenous models. The results show that endogenous rates of return to capital are less applicable in growth accounts in which the coverage of capital is restricted to fixed assets only. The rates of return to capital converge when expanding the capital inputs with additional assets such as land, inventories, and subsoil assets. But this is not necessarily true for the capital contributions to economic growth. Finally, the capitalization of a wider range of intangible assets, beyond the SNA boundaries, has particularly for the 1995–2001 period a significant effect on the Dutch Growth Accounting results, irrespective of using either an exogenous or an endogenous rate of return to capital.

Date: 2014
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