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Aggregation of economic growth rates and of its sources

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  • Zelenyuk, Valentin

Abstract

In this paper we consider the question of measuring aggregate economic growth and its sources. We derive a theoretically justified solution for aggregating (across firms, industries, countries, etc.) growth rates and their sources within the framework of Solow's (1957) growth accounting method. The resulting aggregation scheme turns out to be quite intuitive and, in fact, the one that is sometimes used in practice, but with theoretical justification missing and so the main value of our work is that our formal derivations show under what conditions this scheme has economic theory justification. We also provide a small empirical illustration of our method on the real data set and show how different the conclusions can be depending on the aggregation scheme used.

Suggested Citation

  • Zelenyuk, Valentin, 2011. "Aggregation of economic growth rates and of its sources," European Journal of Operational Research, Elsevier, vol. 212(1), pages 190-198, July.
    • Handle: RePEc:eee:ejores:v:212:y:2011:i:1:p:190-198
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    1. Fare, Rolf & Zelenyuk, Valentin, 2007. "Extending Fare and Zelenyuk (2003)," European Journal of Operational Research, Elsevier, vol. 179(2), pages 594-595, June.
    2. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 407-437.
    3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    4. Daniel J. Henderson & Valentin Zelenyuk, 2007. "Testing for (Efficiency) Catching-up," Southern Economic Journal, John Wiley & Sons, vol. 73(4), pages 1003-1019, April.
    5. Vladimir Nesterenko & Valentin Zelenyuk, 2007. "Measuring potential gains from reallocation of resources," Journal of Productivity Analysis, Springer, vol. 28(1), pages 107-116, October.
    6. Fare, Rolf & Zelenyuk, Valentin, 2003. "On aggregate Farrell efficiencies," European Journal of Operational Research, Elsevier, vol. 146(3), pages 615-620, May.
    7. Kuosmanen, Timo & Cherchye, Laurens & Sipilainen, Timo, 2006. "The law of one price in data envelopment analysis: Restricting weight flexibility across firms," European Journal of Operational Research, Elsevier, vol. 170(3), pages 735-757, May.
    8. Zelenyuk, Valentin, 2006. "Aggregation of Malmquist productivity indexes," European Journal of Operational Research, Elsevier, vol. 174(2), pages 1076-1086, October.
    9. Oleg Badunenko & Daniel J. Henderson & Valentin Zelenyuk, 2008. "Technological Change and Transition: Relative Contributions to Worldwide Growth During the 1990s," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(4), pages 461-492, August.
    10. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
    11. Subodh Kumar & R. Robert Russell, 2002. "Technological Change, Technological Catch-up, and Capital Deepening: Relative Contributions to Growth and Convergence," American Economic Review, American Economic Association, vol. 92(3), pages 527-548, June.
    12. Daniel J. Henderson & R. Robert Russell, 2005. "Human Capital And Convergence: A Production-Frontier Approach ," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(4), pages 1167-1205, November.
    13. Léopold Simar & Valentin Zelenyuk, 2007. "Statistical inference for aggregates of Farrell-type efficiencies," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1367-1394.
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    Cited by:

    1. Zelenyuk, Valentin, 2015. "Aggregation of scale efficiency," European Journal of Operational Research, Elsevier, vol. 240(1), pages 269-277.
    2. Ilya B. Voskoboynikov, 2023. "Sources of productivity growth in Eastern Europe and Russia before the global financial crisis," Journal of Productivity Analysis, Springer, vol. 59(3), pages 225-241, June.
    3. Walheer, Barnabé, 2019. "Aggregating Farrell efficiencies with private and public inputs," European Journal of Operational Research, Elsevier, vol. 276(3), pages 1170-1177.
    4. Ali Homayoni & Reza Fallahnejad & Farhad Hosseinzadeh Lotfi, 2022. "Cross Malmquist Productivity Index in Data Envelopment Analysis," 4OR, Springer, vol. 20(4), pages 567-602, December.
    5. Andreas Mayer & Valentin Zelenyuk, 2018. "Aggregation of Individual Efficiency Measures and Productivity Indices," CEPA Working Papers Series WP012018, School of Economics, University of Queensland, Australia.
    6. Fare, Rolf & Zelenyuk, Valentin, 2004. "Aggregation of Scale Elasticities Across Firms," MPRA Paper 28055, University Library of Munich, Germany, revised 11 Jan 2010.
    7. Barnabé Walheer, 2019. "Scale, congestion, and technical efficiency of European countries: a sector-based nonparametric approach," Empirical Economics, Springer, vol. 56(6), pages 2025-2078, June.

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