Paasche vs. Laspeyres: The Elasticity of Substitution and Bias in Measures of TFP Growth
AbstractIn recent papers, Nelson and Pack (1995) , Rodrik (1997), and Hsieh (1997a) argue that standard measures of total factor productivity growth in countries where the capital-labour ratio has risen rapidly, e.g. the East Asian NICS, will understate true productivity growth if the elasticity of substitution is less than one and there is labour augmenting technical change. This note shows that this argument increases a Paasche measure of productivity, at the expense of lowering a Laspeyres estimate. The conditions under which total factor productivity growth is consistently underestimated are clarified.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6663.
Date of creation: Jul 1998
Date of revision:
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rodrik, Dani, 1997.
"TFPG Controversies, Institutions, and Economic Performance in East Asia,"
CEPR Discussion Papers, C.E.P.R. Discussion Papers
1587, C.E.P.R. Discussion Papers.
- Dani Rodrik, 1997. "TFPG Controversies, Institutions, and Economic Performance in East Asia," NBER Working Papers 5914, National Bureau of Economic Research, Inc.
- Young, Alwyn, 1995. "The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(3), pages 641-80, August.
- CARLOS ESTEBAN POSADA & Wiliman GÃ³mez, 2002.
"Crecimiento EconÃ³mico Y Gasto PÃºblico Un Modelo Para El Caso Colombiano,"
ENSAYOS SOBRE POLÃTICA ECONÃ“MICA, BANCO DE LA REPÃšBLICA - ESPE,
BANCO DE LA REPÃšBLICA - ESPE.
- Carlos Estaban Posada & Wilman GÃ³mez, 2002. "Crecimiento EconÃ³mico Y Gasto PÃºblico Un Modelo Para El Caso Colombiano," ENSAYOS SOBRE POLÃTICA ECONÃ“MICA, BANCO DE LA REPÃšBLICA - ESPE, BANCO DE LA REPÃšBLICA - ESPE.
- Carlos Esteban Posada & Wilman GÃ³mez, . "Crecimiento EconÃ³mico y Gasto PÃºblico: Un Modelo para el Caso Colombiano," Borradores de Economia 218, Banco de la Republica de Colombia.
- Carlos Esteban Posada & Wilman GÃ³mez, 2002. "Crecimiento EconÃ³mico y Gasto PÃºblico: Un Modelo para el Caso Colombiano," BORRADORES DE ECONOMIA 002218, BANCO DE LA REPÃšBLICA.
- Wachter, Till von, 2001. "Employment and productivity growth in service and manufacturing sectors in France, Germany and the US," Working Paper Series, European Central Bank 0050, European Central Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.