Dynamic Analysis of Structural Change and Productivity Measurement
AbstractA 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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Bibliographic InfoPaper provided by Oslo University, Department of Economics in its series Memorandum with number 27/2008.
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.
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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
Web page: http://www.oekonomi.uio.no/indexe.html
More information through EDIRC
Structural change; productivity measurement; putty-clay; ex ante production function; short-run industry production function;
Find related papers by JEL classification:
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L61 - Industrial Organization - - Industry Studies: Manufacturing - - - Metals and Metal Products; Cement; Glass; Ceramics
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