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Integrated Industry and Economy-wide TFP-Measures with Different Prices in Different Uses

Pirkko Aulin-Ahmavaara () and Perttu Pakarinen

Economic Systems Research, 2007, vol. 19, issue 3, 253-276

Abstract: We derive a consistent system of industry and economy-wide measures of TFP growth based on weaker assumptions than used in the literature so far. We allow different industries to pay different prices for the same product. These price differences are not assumed to cancel out at the economy-wide level. Our economy-wide concepts of output are the average growth rates of deliveries to final demand and of the industries' value added. In the case of the former, both net taxes on products and imported intermediates contribute, in addition to labour and capital, to the output growth and even the reallocation of intermediates contributes to the economy-wide TFP growth. In the case of the latter only capital and labour contribute to the output growth and the contribution of the reallocation of intermediates is largely offset by that of value added. We demonstrate the consequences of the non-additivity of the Tornqvist index formula.

Keywords: Growth accounting; productivity; aggregation (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1080/09535310701571927

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