In this paper I consider the relation between gross output based total factor productivity (TFP) measures. It appears that, without any (micro-)economic theory being required, a conditional relationship between TFP indices can be derived, in which the Domar factor plays an important role. At the same time it turns out that gross output based TFP indicators (difference-type measures) always coincide. In the Divisia index framework and maintaining the classical assumptions (profit maximization and a production technology that exhibits globally constant returns to scale), it appears that both TFP indices measure technological change, albeit in a dual way. In establishing this result, no separability assumptions are involved. Both indices are in general path-dependent. Path independence of the gross output based TFP index requires Hicks value-added neutrality. These two concepts of neutrality are, however, not dual.
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Volume (Year): 13 (2009) Issue (Month): S2 (September) Pages: 241-267 Download reference. The following formats are available: HTML
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