An aggregate quantity-price framework for measuring and decomposing productivity and profitability change

O’Donnell, C. J. (2008). An aggregate quantity-price framework for measuring and decomposing productivity and profitability change. WP07/2008 , School of Economics, University of Queensland.

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Author O’Donnell, C. J.
Title An aggregate quantity-price framework for measuring and decomposing productivity and profitability change
School, Department or Centre School of Economics
Institution University of Queensland
Series WP07/2008
Publication date 2008-11-13
Start page 1
End page 40
Total pages 40
Language eng
Formatted abstract
Total factor productivity (TFP) is often 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. In this paper, such index numbers are said to be multiplicatively complete. Complete indexes can be shown to satisfy important axioms from index number theory. This paper formally defines what is meant by completeness and demonstrates that i) the class of complete TFP index numbers includes Törnqvist, Konus and Moorsteen-Bjurek indexes, ii) the popular Malmquist TFP index of Caves, Christensen and Diewert (1982a, p.45) is incomplete, iii) any complete TFP index can be decomposed into measures of technical change, technical efficiency change, mix efficiency change, and scale efficiency change, and iv) profitability change can be broken into these same components plus a component representing the change in the terms of trade. An artificial data set is used to illustrate the decomposition of the Moorsteen-Bjurek TFP index.
Institutional Status UQ

Document type: Working Paper
Collection: School of Economics Publications
 
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Created: Fri, 11 Sep 2015, 13:49:41 EST by Tammy Crealy on behalf of School of Economics