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Selecting between different productivity measurement approaches: An application using EU KLEMS data

Dimitris Giraleas, Ali Emrouznejad and Emmanuel Thanassoulis

MPRA Paper from University Library of Munich, Germany

Abstract: Over the years, a number of different approaches were developed to measure productivity change, both in the micro and the macro setting. Since each approach comes with its own set of assumptions, it is not uncommon in practice that they produce different, and sometimes quite divergent, productivity change estimates. This paper introduces a framework that can be used to select between the most common productivity measurement approaches based on a number of characteristics specific to the application/dataset at hand; these were selected based on the results of previous simulation analysis that examined the accuracy of different productivity measurement approaches under different conditions. The characteristics in question include input volatility through time, the extent of technical inefficiency and noise present in the dataset and whether the parametric approaches are likely to suffer from functional form miss-specification and are examined using a number of well-established diagnostics and indicators. Once assessed, the most appropriate approach can be selected based on its relative accuracy under these conditions; accuracy can in turn be assessed using simulation analysis, either previously published or designed specifically to emulate the characteristics of the application/dataset at hand. As an example of how this selection framework can be implemented in practice, we assess the productivity performance of a number of EU countries using the EU KLEMS dataset.

Keywords: Data envelopment analysis; Productivity and competitiveness; Simulation; Stochastic Frontier Analysis; Growth accounting (search for similar items in EconPapers)
JEL-codes: C15 D24 O47 (search for similar items in EconPapers)
Date: 2012-03
New Economics Papers: this item is included in nep-cmp and nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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