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Output Growth Decomposition in the Presence of Input Quality Effects: A Stochastic Frontier Approach

Author

Listed:
  • Rim Limam Yasmina

    (Université de Carthage,Tunis, Tunisia)

  • Garzarelli Giampaolo

    (Sapienza – Università di Roma,Rome, Italy)

  • Miller Stephen M.

    (University of Nevada,Las Vegas, United States of America)

Abstract

How do physical capital accumulation and total factor productivity (TFP) individually add to economic growth? We approach this question from the perspective of the quality of physical capital and labor, namely the age of physical capital and human capital. We build a unique dataset by explicitly calculating the age of physical capital for each country and each year of our time frame and estimate a stochastic frontier production function incorporating input quality in five regions of countries (Africa, East Asia, Latin America, South Asia and West). Physical capital accumulation generally proves much more important than either the improved quality of factors or TFP growth in explaining output growth. The age of capital decreases growth in all regions except in Africa, while human capital increases growth in all regions except in East Asia.

Suggested Citation

  • Rim Limam Yasmina & Garzarelli Giampaolo & Miller Stephen M., 2019. "Output Growth Decomposition in the Presence of Input Quality Effects: A Stochastic Frontier Approach," German Economic Review, De Gruyter, vol. 20(4), pages 383-409, December.
    • Handle: RePEc:bpj:germec:v:20:y:2019:i:4:p:383-409
    DOI: 10.1111/geer.12147
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