TFP Growth in Spanish Regions: Effects of QuasiFixed and External Factors and Varying Capacity Utilization

José Boscá, Javier Escribá and Mª.José Murgui

No 2002/08, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: The aim of this paper is to evaluate empirically the relevance of the presence of quasi-fixed and external inputs, non-constant returns to scale, and the degree of capacity utilization in the calculation of TFP growth for the private productive sector of Spanish regions over the 1980-1993 period. Using a parametric framework based on the estimation of cost functions, we find that for the whole of the Spanish private sector, the traditional “Solow” estimate of TFP growth overestimates true technological progress due to the omission of infrastructures. Nevertheless, we find clear cyclical behavior, given that in economic expansions the “Solow” estimate underestimates true technological progress, while in times of recession the opposite is true. This result is also common to the majority of the Spanish regions, as is the fact that on average almost all of them have over-utilized installed capacity.

Keywords: Infrastructures; private capital; costs and productivity (search for similar items in EconPapers)
Pages: 30
Date: 2002
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Persistent link: https://EconPapers.repec.org/RePEc:oeg:wpaper:2002/08

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