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

John Fernald () and Brent Neiman

No 16043, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We derive aggregate growth-accounting implications for a two-sector economy with heterogeneous capital subsidies and monopoly power. In this economy, measures of total factor productivity (TFP) growth in terms of quantities (the primal) and real factor prices (the dual) can diverge from each other as well as from true technology growth. These distortions potentially give rise to dynamic reallocation effects that imply that change in technology needs to be measured from the bottom up rather than the top down. We show an example, for Singapore, of how incomplete data can be used to obtain estimates of aggregate and sectoral technology growth as well as reallocation effects. We also apply our framework to reconcile divergent TFP estimates in Singapore and to resolve other empirical puzzles regarding Asian development.

JEL-codes: E01 F43 O4 (search for similar items in EconPapers)
Date: 2010-06
Note: EFG IFM PR
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Citations: View citations in EconPapers (5)

Published as John Fernald & Brent Neiman, 2011. "Growth Accounting with Misallocation: Or, Doing Less with More in Singapore," American Economic Journal: Macroeconomics, American Economic Association, vol. 3(2), pages 29-74, April.

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Related works:
Journal Article: Growth Accounting with Misallocation: Or, Doing Less with More in Singapore (2011)
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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