Total Factor Productivity Growth when Factors of Production Generate Environmental Externalities
AbstractTotal factor productivity growth (TFPG) has been traditionally associated with technological change. We show that when a factor of production, such as energy, generates an environmental externality in the form of CO2 emissions which is not internalized because of lack of environmental policy, then TFPG estimates could be biased. This is because the contribution of environment as a factor of production is not accounted for in the growth accounting framework. Empirical estimates confirm this hypothesis and suggest that part of what is regarded as technology’s contribution to growth could be attributed to the use of environment in output production.
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Bibliographic InfoPaper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2009.20.
Date of creation: Mar 2009
Date of revision:
Total Factor Productivity; Sources of Growth; Environmental Externalities; Energy; Environmental Policy;
Find related papers by JEL classification:
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
- Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2009-07-28 (Agricultural Economics)
- NEP-ALL-2009-07-28 (All new papers)
- NEP-EFF-2009-07-28 (Efficiency & Productivity)
- NEP-ENE-2009-07-28 (Energy Economics)
- NEP-ENV-2009-07-28 (Environmental Economics)
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