An aggregate quantity framework for measuring and decomposing productivity change

O'Donnell, C. J. (2012) An aggregate quantity framework for measuring and decomposing productivity change. Journal of Productivity Analysis, 38 3: 255-272. doi:10.1007/s11123-012-0275-1

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Author O'Donnell, C. J.
Title An aggregate quantity framework for measuring and decomposing productivity change
Journal name Journal of Productivity Analysis   Check publisher's open access policy
ISSN 0895-562X
1573-0441
Publication date 2012-12
Sub-type Article (original research)
DOI 10.1007/s11123-012-0275-1
Open Access Status
Volume 38
Issue 3
Start page 255
End page 272
Total pages 18
Place of publication Secaucus, NJ, United States
Publisher Springer
Collection year 2013
Language eng
Abstract Total factor productivity (TFP) can be defined as the ratio of an aggregate output to an aggregate input. This definition naturally leads to TFP indexes that can be expressed as the ratio of an output quantity index to an input quantity index. If the aggregator functions satisfy certain regularity properties then these TFP indexes are said to be multiplicativelycomplete. This paper formally defines what is meant by completeness and reveals that (1) the class of multiplicatively complete TFP indexes includes Laspeyres, Paasche, Fisher, Törnqvist and Hicks-Moorsteen indexes, (2) the popular Malmquist TFP index of Caves et al. (Econometrica 50(6):1393-1414, 1982a) is incomplete, implying it cannot always be interpreted as a measure of productivity change, (3) all multiplicatively complete TFP indexes can be exhaustively decomposed into measures of technical change and efficiency change, and (4) the efficiency change component can be further decomposed into measures of technical, mix and scale efficiency change. Artificial data are used to illustrate the decomposition of Hicks-Moorsteen and Fisher TFP indexes.
Keyword Index numbers
Total factor productivity
Efficiency
Malmquist index
Hicks-Moorsteen index
Fisher index
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Published online: 3 April 2012.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2013 Collection
School of Economics Publications
 
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