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Dynamic Analysis of Structural Change and Productivity Measurement

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  • Førsund, Finn R.

    ()
    (Dept. of Economics, University of Oslo)

  • Hjalmarsson, Lennart

    (Department of Economics, University of Gothenburg)

Abstract

A dynamic analysis of structural change is reviewed based on a vintage model of substitutability between inputs including capital before investment, but no substitution possibilities after investment, and ex post production possibilities characterised by fixed input coefficients. Key elements in understanding structural change are the entering of capacity embodying new technology and exiting of capacity no longer able to yield positive quasi-rent. Three production function concepts are identified: the ex ante micro unit production function as relevant when investing in new capacity, the ex post micro production function, and the short-run industry production function giving the production possibilities at the industry level. Productivity measurement, taking these types of production functions into consideration, leads to different interpretations of productivity change than traditional approaches not being clear about which production function concept is used.

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File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2008/Memo-27-2008.pdf
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Bibliographic Info

Paper provided by Oslo University, Department of Economics in its series Memorandum with number 27/2008.

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Length: 31 pages
Date of creation: 01 Oct 2008
Date of revision:
Publication status: Published as Førsund, Finn R., 'Dynamic Efficiency Measurement' in Indian Economic Review, 2010, pages 125-159.
Handle: RePEc:hhs:osloec:2008_027

Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Email:
Web page: http://www.oekonomi.uio.no/indexe.html
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Related research

Keywords: Structural change; productivity measurement; putty-clay; ex ante production function; short-run industry production function;

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References

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  1. Torstein Bye & Erling Erling Holmoy, 2010. "Removing Policy-based Comparative Advantage for Energy Intensive Production: Necessary Adjustments of the Real Exchange Rate and Industry Structure," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 177-198.
  2. Førsund, Finn R. & Hjalmarsson, Lennart, 1978. "Generalized Farrell Measures of Efficiency: An Application to Milk Processing in Swedish Dairy Plants," Working Paper Series 17, Research Institute of Industrial Economics.
  3. Forsund, Finn R & Jansen, Eilev S, 1983. " Technical Progress and Structural Change in the Norwegian Primary Aluminum Industry," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(2), pages 113-26.
  4. Dale W. Jorgenson, 1966. "The Embodiment Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 74, pages 1.
  5. Kevin J. Fox & W. Erwin Diewert, 2004. "On the Estimation of Returns to Scale, Technical Progress and Monopolistic Markups," Econometric Society 2004 Australasian Meetings 310, Econometric Society.
  6. Jorgenson, Dale W., 1966. "The Embodiment Hypothesis," Scholarly Articles 3403063, Harvard University Department of Economics.
  7. Berg, Sigbjorn Atle & Forsund, Finn R & Jansen, Eilev S, 1992. " Malmquist Indices of Productivity Growth during the Deregulation of Norwegian Banking, 1980-89," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(0), pages S211-28, Supplemen.
  8. Eide, E, 1976. "Do New Factories Embody Potential Best Practice Technology?," Empirical Economics, Springer, vol. 1(2), pages 119-27.
  9. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
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