A General Equilibrium Analysis of the Evolution of Canadian Service Productivity

Pierre Mohnen and Thijs ten Raa

Chapter 21 in Input–Output Economics: Theory and Applications:Featuring Asian Economies, 2009, pp 391-409 from World Scientific Publishing Co. Pte. Ltd.

Abstract: AbstractCan the slowdown in total factor productivity that we have experienced since the mid-seventies be ascribed to the increasing importance of services, or do we instead observe an improvement of productivity in the service sectors by way of learning-by-doing or specialization? We feel that such questions are best answered within a general equilibrium analysis of the whole economy, i.e. a structural view of the whole economy. We maximize the level of domestic consumption subject to commodity balances and endowment constraints. The Lagrange multipliers associated with the endowment constraints measure the marginal productivities of labor and capital. We declare these shadow prices to be the factor productivities. The main empirical contribution of this paper is a reexamination of the services paradox. In Canada, the sluggish productivity in services is limited to finance, insurance and real estate, and to business and personal services. Any attempt to resolve the services paradox may focus on these two sectors. Transportation, trade, and to a lesser extent communication, are progressive sectors.

Keywords: Input–Output Analysis; National Accounts; Productivity; Performance; Canadian Economy; Chinese Economy; Indian Economy; Asian Economics (search for similar items in EconPapers)
Date: 2009
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Related works:
Journal Article: A general equilibrium analysis of the evolution of Canadian service productivity (2000)
Working Paper: A general equilibrium analysis of the evolution of Canadian service productivity (2000)
Working Paper: A General Equilibrium Analysis of the Evolution of the Canadian Service Productivity (1997)
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