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The Verdoorn Law: Some Evidence from Non-parametric Frontier Analysis

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  • Destefanis, Sergio

Abstract

In this paper we show how the nature of economies of scale can be assessed using a set of procedures based on non-parametric frontier analysis. Through these procedures it is possible to characterise qualitatively the nature of returns to scale for each observation, yielding important information on the heterogeneity of observations across both time and space. Also an approximate quantitative measure of returns to scale can be produced for each observation. By way of application, we assess economies of scale across a sample of 52 countries, taken from the Penn World Table, mark 5.6. We suggest that this exercise is a useful addition to the existing literature on Verdoorn Law, as non-parametric frontier analysis allows a novel approach to the issues of simultaneity and spuriousness.

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  • Destefanis, Sergio, 2002. "The Verdoorn Law: Some Evidence from Non-parametric Frontier Analysis," MPRA Paper 60954, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:60954
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    Cited by:

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    2. Walter Briec & Kristiaan Kerstens, 2006. "Input, output and graph technical efficiency measures on non-convex FDH models with various scaling laws: An integrated approach based upon implicit enumeration algorithms," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 14(1), pages 135-166, June.
    3. Douglas Alencar & Frederico G. Jayme Jr & Gustavo Britto, 2021. "A post-Kaleckian model with productivity growth and real exchange rate applied to selected Latin American countries," PSL Quarterly Review, Economia civile, vol. 74(297), pages 127-146.
    4. Ofria, Ferdinando & Millemaci, Emanuele, 2010. "Kaldor-Verdoorn’s law and increasing returns to scale: a comparison across developed countries," MPRA Paper 30941, University Library of Munich, Germany.
    5. Concetta Castiglione, 2011. "Verdoorn-Kaldor’s Law: an empirical analysis with time series data in the United States," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 1(3), pages 1-8.
    6. J. Vakili & R. Sadighi Dizaji, 2021. "The closest strong efficient targets in the FDH technology: an enumeration method," Journal of Productivity Analysis, Springer, vol. 55(2), pages 91-105, April.
    7. M. Centorrino & F. Ofria, 2008. "Organized crime and labour productivity in the Mezzogiorno: an application of the "Kaldor-Verdoorn" model," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 1, pages 163-188.
    8. Deepankar Basu & Duncan K. Foley, 2013. "Dynamics of output and employment in the US economy," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 37(5), pages 1077-1106.
    9. Douglas Alencar & Frederico G. Jayme & Gustavo Britto & Cláudio Puty, 2021. "Distribution and Productivity Growth: An Empirical Exercise Applied to Selected Latin American Countries," Review of Political Economy, Taylor & Francis Journals, vol. 33(3), pages 487-510, July.
    10. Francesco Crespi & Mario Pianta, 2008. "Demand and innovation in productivity growth," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(6), pages 655-672.
    11. Deepankar Basu1, Duncan K. Foley, 2011. "WP 2011-4 Dynamics of Output and Employment in the U.S. Economy," SCEPA working paper series. 2011-4, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
    12. Cesaroni, Giovanni & Kerstens, Kristiaan & Van de Woestyne, Ignace, 2017. "Global and local scale characteristics in convex and nonconvex nonparametric technologies: A first empirical exploration," European Journal of Operational Research, Elsevier, vol. 259(2), pages 576-586.
    13. Ferdinando Ofria, 2009. "L'approccio Kaldor-Verdoorn: una verifica empirica per il Centro-Nord e il Mezzogiorno d'Italia (anni 1951-2006)," Rivista di Politica Economica, SIPI Spa, issue 1, pages 179-207, January-M.
    14. Ute Pieper, 2003. "Sectoral regularities of productivity growth in developing countries--a Kaldorian interpretation," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 27(6), pages 831-850, November.
    15. Pieper, Ute, 2000. "Sectoral regularities of productivity growth in developing countries - A Kaldorian interpretation," Research Memorandum 030, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    DEA; FDH; Increasing returns to scale; Elasticity of scale; Penn World Table.;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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