On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries
Diewert (2015) develops simple expressions for the exact relationship between value added TFP growth and gross output TFP growth. These expressions suggest that the magnification factor relating the two TFP growth measures is approximately equal to the share of primary inputs in total costs. We appl...
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| Format: | Article |
| Language: | English |
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Centre for the Study of Living Standards
2015-09-01
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| Series: | International Productivity Monitor |
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| Online Access: | http://www.csls.ca/ipm/29/calver.pdf |
| _version_ | 1818516653027098624 |
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| author | Matthew Calver |
| author_facet | Matthew Calver |
| author_sort | Matthew Calver |
| collection | DOAJ |
| description | Diewert (2015) develops simple expressions for the exact relationship between value added TFP growth and gross output TFP growth. These expressions suggest that the magnification factor relating the two TFP growth measures is approximately equal to the share of primary inputs in total costs. We apply these simple approximations to data on Australian industries, finding that they tend to provide very close approximations over short time periods, but are less reliable over longer time horizons. We find that magnification factors vary significantly across industries so that the results of comparative studies can be quite sensitive to the choice of output measure chosen to construct TFP. In particular, industries in which intermediate inputs account for a large share of total inputs exhibit much smaller TFP growth (in absolute value) compared to industries where intermediate inputs are relatively unimportant when gross output is used to construct TFP measures rather than value added. |
| first_indexed | 2024-12-11T00:45:06Z |
| format | Article |
| id | doaj.art-82a37aebb1f540489e42ecd5a72710bc |
| institution | Directory Open Access Journal |
| issn | 1492-9759 1492-9767 |
| language | English |
| last_indexed | 2024-12-11T00:45:06Z |
| publishDate | 2015-09-01 |
| publisher | Centre for the Study of Living Standards |
| record_format | Article |
| series | International Productivity Monitor |
| spelling | doaj.art-82a37aebb1f540489e42ecd5a72710bc2022-12-22T01:26:48ZengCentre for the Study of Living StandardsInternational Productivity Monitor1492-97591492-97672015-09-01296882On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian IndustriesMatthew Calver0Centre for the Study of Living StandardsDiewert (2015) develops simple expressions for the exact relationship between value added TFP growth and gross output TFP growth. These expressions suggest that the magnification factor relating the two TFP growth measures is approximately equal to the share of primary inputs in total costs. We apply these simple approximations to data on Australian industries, finding that they tend to provide very close approximations over short time periods, but are less reliable over longer time horizons. We find that magnification factors vary significantly across industries so that the results of comparative studies can be quite sensitive to the choice of output measure chosen to construct TFP. In particular, industries in which intermediate inputs account for a large share of total inputs exhibit much smaller TFP growth (in absolute value) compared to industries where intermediate inputs are relatively unimportant when gross output is used to construct TFP measures rather than value added.http://www.csls.ca/ipm/29/calver.pdftotal factor productivityeconomy |
| spellingShingle | Matthew Calver On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries International Productivity Monitor total factor productivity economy |
| title | On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries |
| title_full | On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries |
| title_fullStr | On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries |
| title_full_unstemmed | On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries |
| title_short | On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries |
| title_sort | on the relationship between gross output based tfp growth and value added based tfp growth an illustration using data from australian industries |
| topic | total factor productivity economy |
| url | http://www.csls.ca/ipm/29/calver.pdf |
| work_keys_str_mv | AT matthewcalver ontherelationshipbetweengrossoutputbasedtfpgrowthandvalueaddedbasedtfpgrowthanillustrationusingdatafromaustralianindustries |