IDEAS home Printed from https://ideas.repec.org/a/sls/ipmsls/v29y20155.html
   My bibliography  Save this article

On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries

Author

Listed:
  • Matthew Calver

Abstract

Diewert (2015) develops simple expressions for the exact relationship between value added TFP growth and gross output TFP growth. These expressions suggest that the magnification factor relating the two TFP growth measures is approximately equal to the share of primary inputs in total costs. We apply these simple approximations to data on Australian industries, finding that they tend to provide very close approximations over short time periods, but are less reliable over longer time horizons. We find that magnification factors vary significantly across industries so that the results of comparative studies can be quite sensitive to the choice of output measure chosen to construct TFP. In particular, industries in which intermediate inputs account for a large share of total inputs exhibit much smaller TFP growth (in absolute value) compared to industries where intermediate inputs are relatively unimportant when gross output is used to construct TFP measures rather than value added.

Suggested Citation

  • Matthew Calver, 2015. "On the Relationship between Gross Output-based TFP Growth and Value Added-based TFP Growth: An Illustration Using Data from Australian Industries," International Productivity Monitor, Centre for the Study of Living Standards, vol. 29, pages 68-82, Fall.
    • Handle: RePEc:sls:ipmsls:v:29:y:2015:5
    as

    Download full text from publisher

    File URL: http://www.csls.ca/ipm/29/calver.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Paul Schreyer, 2001. "The OECD Productivity Manual: A Guide to the Measurement of Industry-Level and Aggregate Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 37-51, Spring.
    2. Erwin Diewert, 2015. "Reconciling Gross Output TFP Growth with Value Added TFP Growth," International Productivity Monitor, Centre for the Study of Living Standards, vol. 29, pages 60-67, Fall.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alexander Murray, 2016. "Partial versus Total Factor Productivity: Assessing Resource Use in Natural Resource Industries in Canada," CSLS Research Reports 2016-20, Centre for the Study of Living Standards.
    2. Erwin Diewert, 2015. "Reconciling Gross Output TFP Growth with Value Added TFP Growth," International Productivity Monitor, Centre for the Study of Living Standards, vol. 29, pages 60-67, Fall.
    3. Matthew Calver & Fanny McKellips, 2016. "Productivity Trends in the Canadian Transport Sector: An Overview," CSLS Research Reports 2016-04, Centre for the Study of Living Standards.
    4. Bert M. Balk, 2020. "A novel decomposition of aggregate total factor productivity change," Journal of Productivity Analysis, Springer, vol. 53(1), pages 95-105, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. John R. Baldwin & Tarek M. Harchaoui, 2006. "The Integration of the Canadian Productivity Accounts within the System of National Accounts: Current Status and Challenges Ahead," NBER Chapters, in: A New Architecture for the US National Accounts, pages 439-470, National Bureau of Economic Research, Inc.
    2. Kox, Henk L.M. & Leeuwen, George van & Wiel, Henry van der, 2010. "Competitive, but too small - productivity and entry-exit determinants in European business services," MPRA Paper 24389, University Library of Munich, Germany.
    3. Dirk Pilat, 2001. "Productivity Growth in the OECD Area: Some Recent Findings," International Productivity Monitor, Centre for the Study of Living Standards, vol. 3, pages 32-44, Fall.
    4. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2005. "Growth of US Industries and Investments in Information Technology and Higher Education," NBER Chapters, in: Measuring Capital in the New Economy, pages 403-478, National Bureau of Economic Research, Inc.
    5. Nicholas Oulton, 2007. "Ex Post Versus Ex Ante Measures Of The User Cost Of Capital," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(2), pages 295-317, June.
    6. Marcel P. Timmer & Ilya B. Voskoboynikov, 2014. "Is Mining Fuelling Long-Run Growth in Russia? Industry Productivity Growth Trends Since 1995," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 60(S2), pages 398-422, November.
    7. Paolo Cosseddu & Maria Cozzolino & Ernesto Lorenzo Felli, 2012. "Structural Reform And Efficiency In Public Administration: Measuring The "Productvity Gap"," Working Papers 0812, CREI Università degli Studi Roma Tre, revised 2012.
    8. AFAWUBO, Komivi & NOGLO, Yawo Agbényégan, 2022. "ICT and entrepreneurship: A comparative analysis of developing, emerging and developed countries," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    9. H.-J. Engelbrecht & V. Xayavong, 2007. "The Elusive Contribution Of Ict To Productivity Growth In New Zealand: Evidence From An Extended Industry-Level Growth Accounting Model," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(4), pages 255-275.
    10. Troy Matheson, 2006. "A more flexible decomposition of productivity growth," Applied Economics Letters, Taylor & Francis Journals, vol. 13(11), pages 695-698.
    11. Robert Inklaar & Marcel P. Timmer & Bart Van Ark, 2007. "Mind the Gap! International Comparisons of Productivity in Services and Goods Production," German Economic Review, Verein für Socialpolitik, vol. 8(2), pages 281-307, May.
    12. Erwin Diewert & Chihiro Shimizu, 2017. "Alternative Approaches to Commercial Property Price Indexes for Tokyo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(3), pages 492-519, September.
    13. Michael Peneder & Catherine Prettner, 2021. "Entwicklung der Produktivität österreichischer Unternehmen von 2008 bis 2018. Auswertung von Mikrodaten für Österreich im Rahmen von Multiprod 2.0," WIFO Studies, WIFO, number 67450, April.
    14. W. Erwin Diewert & Kevin J. Fox & Chihiro Shimizu, 2016. "Commercial Property Price Indexes And The System Of National Accounts," Journal of Economic Surveys, Wiley Blackwell, vol. 30(5), pages 913-943, December.
    15. C. J. O’Donnell, 2021. "Estimating the Effects of Weather and Climate Change on Agricultural Productivity," CEPA Working Papers Series WP032021, School of Economics, University of Queensland, Australia.
    16. Shuaitao Jiao & Qiubi Sun, 2021. "Digital Economic Development and Its Impact on Econimic Growth in China: Research Based on the Prespective of Sustainability," Sustainability, MDPI, vol. 13(18), pages 1-19, September.
    17. Edward Baranov & Igor Kim & Elena Staritsyna, 2011. "Estimation of Russian Constant-Price Input-Output Accounts According to NACE/CPA," HSE Working papers WP BRP 07/EC/2011, National Research University Higher School of Economics.
    18. Harchaoui, Tarek Jean, Jimmy Tarkhani, Faouzi, 2003. "Prosperity and Productivity: A Canada-Australia Comparison," Economic Analysis (EA) Research Paper Series 2003018e, Statistics Canada, Analytical Studies Branch.
    19. repec:dgr:rugggd:gd-89 is not listed on IDEAS
    20. W. Erwin Diewert & Kiyohiko G. Nishimura & Chihiro Shimizu & Tsutomu Watanabe, 2020. "Measuring the Services of Durables and Owner Occupied Housing," Advances in Japanese Business and Economics, in: Property Price Index, chapter 0, pages 223-298, Springer.
    21. Bishwanath Goldar & K. L. Krishna & Suresh Chand Aggarwal & Deb Kusum Das & Abdul Azeez Erumban & Pilu Chandra Das, 2017. "Productivity growth in India since the 1980s: the KLEMS approach," Indian Economic Review, Springer, vol. 52(1), pages 37-71, December.

    More about this item

    Keywords

    Value Added Total Factor Productivity; Total Factor Productivity; Laspeyres; Paasche; Fisher; Gross Output Total Factor Productivity;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania
    • N67 - Economic History - - Manufacturing and Construction - - - Africa; Oceania
    • N77 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Africa; Oceania

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sls:ipmsls:v:29:y:2015:5. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CSLS (email available below). General contact details of provider: https://edirc.repec.org/data/cslssca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.