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Sources of productivity growth : Technology, terms of trade and preference shifts

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  • Ten Raa, T.

    (Tilburg University, Center For Economic Research)

  • Mohnen, P.

Abstract

The standard measure of productivity growth is the Solow residual. Its evaluation requires data on factor input shares or prices. Since these prices are presumed to match factor productivities, the standard procedure amounts to accepting at face value what is supposed to be measured. In this paper we determine total factor productivity growth without recourse to data on factor input prices. Factor productivities are defined as Lagrange multipliers to the program that maximizes the level of domestic final demand. The consequent measure of total factor productivity is shown to encompass not only the Solow residual, but also the terms-of-trade and preference-shift effects. Using input-output tables from 1962 to 1991 we show that the source of Canadian productivity growth has shifted from technical change to terms-of-trade effects. D'habitude, on mesure la croissance de la productivité par le résidu de Solow. Pour ce faire, on a besoin de prix et de parts de facteurs. Puisque ces prix sont supposés être égaux aux productivités marginales, la mesure habituelle prend pour acquis ce qu'elle est censée mesurer. Dans cet article, nous déterminons la croissance de la productivité totale des facteurs sans avoir recours à des données sur les prix des facteurs. Les productivités factorielles sont définies comme des multiplicateurs de Lagrange d'un programme qui maximise le niveau de la demande finale domestique. La mesure qui découle de la croissance de la productivité totale des facteurs inclut non seulement le résidu de Solow,0501s aussi les effets dus aux termes de l'échange et aux changements de préférence. En utilisant les tableaux entrée-sortie canadiens de 1962 à 1991, nous montrons que la source de la croissance de la productivité au Canada est passée du changement technique aux améliorations des termes de l'échange.
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(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Ten Raa, T. & Mohnen, P., 1998. "Sources of productivity growth : Technology, terms of trade and preference shifts," Discussion Paper 1998-105, Tilburg University, Center for Economic Research.
    • Handle: RePEc:tiu:tiucen:b20f69ad-fc34-4ea5-ad44-20a6154e2e76
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    References listed on IDEAS

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    1. Pierre Mohnen & Thijs Ten Raa & Gilles Bourques, 1994. "Mesures de la croissance de la productivité dans un cadre d'équilibre général: L'économie du Québec entre 1978 et 1984," Cahiers de recherche du Département des sciences économiques, UQAM 9407, Université du Québec à Montréal, Département des sciences économiques.
    2. Wolff, Edward N, 1985. "Industrial Composition, Interindustry Effects, and the U.S. Productivity Slowdown," The Review of Economics and Statistics, MIT Press, vol. 67(2), pages 268-277, May.
    3. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(3), pages 249-283.
    4. Martin L. Weitzman, 1976. "On the Welfare Significance of National Product in a Dynamic Economy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(1), pages 156-162.
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    Cited by:

    1. Pierre Mohnen & Thijs ten Raa, 2009. "Productivity Trends and Employment Across Industries in Canada," World Scientific Book Chapters, in: Input–Output Economics: Theory And Applications Featuring Asian Economies, chapter 22, pages 411-424, World Scientific Publishing Co. Pte. Ltd..
    2. Victoria Shestalova, 2001. "General Equilibrium Analysis of International TFP Growth Rates," Economic Systems Research, Taylor & Francis Journals, vol. 13(4), pages 391-404.

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    More about this item

    Keywords

    productivity; growth models;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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