Alternative Measures of Total Factor Productivity Growth

CentER Discussion Paper No. 2006-54

21 Pages Posted: 26 Jul 2006

See all articles by Thijs ten Raa

Thijs ten Raa

Tilburg University - Center for Economic Research (CentER)

Victoria Shestalova

Netherlands Bureau for Economic Policy Analysis

Date Written: May 2006

Abstract

The four main approaches to the measurement of total factor productivity (TFP)-growth and its decomposition are (i) Solow's residual analysis, (ii) the Index Number Approach, (iii) Input-Output Analysis (IO), and (iv) Data Envelopment Analysis (DEA). The corresponding measures of TFP growth are based on different assumptions, which we expose and interrelate. The Solow Residual serves as the benchmark for our comparisons. The interrelationships between the alternative measures permit an interpretation of the differences among them. We consolidate the four alternative measures in a common framework.

Keywords: TFP, Solow residual, Index numbers, Input-output, DEA

JEL Classification: O47, C67

Suggested Citation

ten Raa, Thijs and Shestalova, Victoria, Alternative Measures of Total Factor Productivity Growth (May 2006). CentER Discussion Paper No. 2006-54, Available at SSRN: https://ssrn.com/abstract=919805 or http://dx.doi.org/10.2139/ssrn.919805

Thijs Ten Raa (Contact Author)

Tilburg University - Center for Economic Research (CentER) ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://center.uvt.nl/staff/raa/

Victoria Shestalova

Netherlands Bureau for Economic Policy Analysis ( email )

2508 GM The Hague
Netherlands

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