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Double Deflation and the Measurement of Output and Productivity in UK Manufacturing 1979-89

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  • Paul Stoneman
  • Nathan Francis

Abstract

The objective of this paper is to examine the impact of applying double deflation methods to the measurement of productivity growth in UK manufacturing between 1979 and 1989. A number of alternative indicators of output growth are considered and it is argued that double deflated value added is the superior concept to employ for the measurement of productivity. It is shown that output measured by double deflated value added fell by 0.05% over the period between 1979 and 1989 whereas the official series indicates that output rose by 12.2% over the period. Measuring productivity as output per person employed, the double deflated value added measure indicates that between 1979 and 1989productivity increased by 34%> whereas the official series indicates an increase of 51 %. Whereas the latter may indicate a productivity miracle the former does not

Suggested Citation

  • Paul Stoneman & Nathan Francis, 1994. "Double Deflation and the Measurement of Output and Productivity in UK Manufacturing 1979-89," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 1(3), pages 423-437.
    • Handle: RePEc:taf:ijecbs:v:1:y:1994:i:3:p:423-437
    DOI: 10.1080/758536231
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    References listed on IDEAS

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    1. Michael Bruno, 1984. "Raw Materials, Profits, and the Productivity Slowdown," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(1), pages 1-29.
    2. Martin Neil Baily, 1986. "Productivity Growth and Materials Use in U. S. Manufacturing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(1), pages 185-195.
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    Cited by:

    1. Honkatukia, Juha, 2006. "Is there potential for government participation in flexibility mechanisms? - Evaluating the Finnish case," Conference papers 331472, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    2. Oulton, Nicholas & Rincon-Aznar, Ana & Samek, Lea & Srinivasan, Sylaja, 2018. "Double deflation: theory and practice," LSE Research Online Documents on Economics 100927, London School of Economics and Political Science, LSE Library.
    3. Stuart Macdonald & Pat Anderson & Dieter Kimbel, 2000. "Measurement or Management?: Revisiting the Productivity Paradox of Information Technology," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 69(4), pages 601-617.
    4. G Cameron, 1996. "Innovation and Economic Growth," CEP Discussion Papers dp0277, Centre for Economic Performance, LSE.
    5. Peter Hooper & Elizabeth Vranlovich, 1995. "International comparisons of the levels of unit labor costs in manufacturing," International Finance Discussion Papers 527, Board of Governors of the Federal Reserve System (U.S.).
    6. Michael Kitson & Jonathan Michie, 1997. "Does Manufacturing Matter?," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 4(1), pages 71-95.
    7. Añón Higón, Dolores & Manjón Antolín, Miguel, 2012. "Multinationality, foreignness and institutional distance in the relation between R&D and productivity," Research Policy, Elsevier, vol. 41(3), pages 592-601.

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    More about this item

    Keywords

    Double deflation; Value added; Productivity; JEL classifications: C8; E2; L6;
    All these keywords.

    JEL classification:

    • C8 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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