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Measuring industry productivity and cross-country convergence

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  • Inklaar, Robert
  • Diewert, W. Erwin

Abstract

This paper introduces a new method for simultaneously comparing industry productivity across countries and over time. The new method is similar to the method for making multilateral comparisons of Caves, Christensen and Diewert (1982b) but their method can only compare gross outputs across production units and not compare real value added of production units across time and space. The present paper uses the translog GDP methodology for measuring productivity levels across time that was pioneered by Diewert and Morrison (1986) and adapts it to the multilateral context. The new method is illustrated using an industry level data set and shows that productivity dispersion across 38 countries between 1995 and 2011 has decreased faster in the traded sector than in the non-traded sector. In both sectors, there is little evidence of decreasing distance to the productivity frontier.

Suggested Citation

  • Inklaar, Robert & Diewert, W. Erwin, 2016. "Measuring industry productivity and cross-country convergence," Journal of Econometrics, Elsevier, vol. 191(2), pages 426-433.
    • Handle: RePEc:eee:econom:v:191:y:2016:i:2:p:426-433
    DOI: 10.1016/j.jeconom.2015.12.013
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    More about this item

    Keywords

    Productivity; Index numbers; Purchasing power parities; Multilateral comparisons; Convergence; Value added functions; Efficiency; World production frontier; Törnqvist indexes; Superlative indexes; Translog functions;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • 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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