Malmquist Productivity Index Decompositions: A Unifying Framework
AbstractIn two widely cited but unpublished working papers, Simar and Wilson (1998) and Zofío and Lovell (1998) proposed an alternative decomposition of the Malmquist Productivity Index, which retained what seemed to be the strongholds of previous proposals with regard to the contribution of technological and efficiency change to productivity change. Namely, a technical change term with regard to the best practice (VRS) technology which is to be found in Ray and Desli (1997) and a scale efficiency change term that illustrates a firm’s situation with regard to optimal scale (benchmark technology), Färe, Grosskopf, Norris and Zhang (1994). Attaining this objective required the introduction of an additional term in the Malmquist Productivity Index decomposition, which would reflect the scale bias of technical change. It is our objective to provide economic rationale for this term within a theory of production context, the existing decompositions and recent articles that further elaborate on this issue. The ideas are illustrated using productivity trends in 17 OECD countries
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Bibliographic InfoPaper provided by Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History) in its series Working Papers in Economic Theory with number 2006/12.
Length: 29 pages
Date of creation: Dec 2006
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More information through EDIRC
Productivity Change; Malmquist Indices; Distance Functions;
Other versions of this item:
- Jose Zofio, 2007. "Malmquist productivity index decompositions: a unifying framework," Applied Economics, Taylor and Francis Journals, vol. 39(18), pages 2371-2387.
- 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
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
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