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Disaggregate productivity comparisons: sectoral convergence in OECD countries

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  • Johannes Van Biesebroeck

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Abstract

International comparisons of the level of labor or total factor productivity have used exchange rates or purchasing power parity (PPP) to make output and capital comparable across countries. Recent evidence suggests that aggregate PPP holds rather well in the long run, making it a good basis for comparison. At the same time, sectoral deviations from PPP are very persistent, raising the need for disaggregate price measures to make disaggregate productivity comparisons. Sectoral differences in the importance of nontradables make it even more important to work with sectoral prices when country-comparisons are made at the sectoral level. Mapping prices from household expenditure surveys into the industrial classification of sectors and adjusting for taxes and international trade, I obtain a sector-specific PPP measure. The few previous studies that used sectoral prices only had conversion factors available for a single year. With price data for 1985, 1990, 1993, and 1996, I am the first to test whether the constructed conversion factors adequately capture differential changes in relative prices between countries. For some industries--Agriculture, Mining, and less sophisticated manufacturing sectors--the indices prove adequate. For most other industries, aggregate PPP is a superior currency conversion factor.

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Bibliographic Info

Article provided by Springer in its journal Journal of Productivity Analysis.

Volume (Year): 32 (2009)
Issue (Month): 2 (October)
Pages: 63-79

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Handle: RePEc:kap:jproda:v:32:y:2009:i:2:p:63-79

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Web page: http://www.springerlink.com/link.asp?id=100296

Related research

Keywords: PPP; Productivity; Convergence; Sectoral comparison; Base year; D24; F14; F31; O47;

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References

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Cited by:
  1. Bourlès, R. & Cette, G. & Lopez, J. & Mairesse, J. & Nicoletti, G., 2010. "Do product market regulations in upstream sectors curb productivity growth? Panel data evidence for OECD countries," Working papers 283, Banque de France.
  2. Johannes Van Biesebroeck, 2007. "Disaggregate Productivity Comparisons: Sectoral Convergence in OECD Countries," Working Papers tecipa-290, University of Toronto, Department of Economics.
  3. Simone Salotti & Carmine Trecroci, 2012. "Even Worse than You thought: The Impact of Public Debt on Aggregate Investment and Productivity," DEGIT Conference Papers c017_020, DEGIT, Dynamics, Economic Growth, and International Trade.
  4. Dijk, Michiel van, 2013. "Productivity growth at the sectoral level: measurement and projections," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152268, International Agricultural Trade Research Consortium.
  5. Bruno Bracalente & Cristiano Perugini, 2008. "The Components of Regional Disparities in Europe," Quaderni del Dipartimento di Economia, Finanza e Statistica 47/2008, Università di Perugia, Dipartimento Economia, Finanza e Statistica.

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