Total Factor Productivity Growth when Factors of Production Generate Environmental Externalities

Dimitra Vouvaki () and Anastasios Xepapadeas

MPRA Paper from University Library of Munich, Germany

Abstract: Total factor productivity growth (TFPG) has been traditionally associated with technological change. We show that when a factor of production, such as energy, generates an environmental externality in the form of CO₂ emissions which is not internalized because of lack of environmental policy, then TFPG estimates could be biased. This is because the contribution of environment as a factor of production is not accounted for in the growth accounting framework. Empirical estimates confirm this hypothesis and suggest that part of what is regarded as technology's contribution to growth could be attributed to the use of environment in output production.

Keywords: Total Factor Productivity; Sources of Growth; Environmental Externalities; Energy; Environmental Policy (search for similar items in EconPapers)
JEL-codes: O4 Q56 (search for similar items in EconPapers)
Date: 2008-08-28
New Economics Papers: this item is included in nep-agr, nep-eff, nep-ene, nep-env and nep-res
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Working Paper: Total Factor Productivity Growth when Factors of Production Generate Environmental Externalities (2009)
Working Paper: Total Factor Productivity Growth when Factors of Production Generate Environmental Externalities (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:10237

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