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

Rim Limam Yasmina, Giampaolo Garzarelli and Stephen Miller
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Rim Limam Yasmina: Université de Carthage,Tunis, Tunisia

German Economic Review, 2019, vol. 20, issue 4, 383-409

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 physical capital and labor, namely the age of physical capital and human capital. We build a unique dataset by explicitly calculating the age of physical capital for each country and each year of our time frame and estimate a stochastic frontier production function incorporating input quality in five regions of countries (Africa, East Asia, Latin America, South Asia and West). Physical capital accumulation generally proves much more important than either the improved quality of factors or TFP growth in explaining output growth. The age of capital decreases growth in all regions except in Africa, while human capital increases growth in all regions except in East Asia.

Keywords: Age of physical capital; embodiment hypothesis; output growth; stochastic frontier; total factor productivity (search for similar items in EconPapers)
Date: 2019
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Journal Article: Output Growth Decomposition in the Presence of Input Quality Effects: A Stochastic Frontier Approach (2019)
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DOI: 10.1111/geer.12147

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