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Manufacturing consumption, relative prices, and productivity

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  • Duarte, Margarida

Abstract

I study the patterns of manufacturing consumption expenditures across a broad set of countries that differ in their level of development using disaggregated expenditure and price data. The relative price of manufacturing tends to decline with income and the real share rises with income, particularly for countries in the top half of the income distribution. I find that the nominal expenditure share of manufacturing displays a hump-shape pattern with respect to the level of income per capita. I document that the income elasticities of the relative price of individual manufacturing categories lie in a wide range. However, since most categories have a negative elasticity, the average elasticity for manufacturing is negative. In addition, most aggregations of individual categories, regardless of the criteria used, yield manufacturing sub-sectors that feature a negative income elasticity of its relative price and the variation across income in nominal expenditure shares tends to mask a larger variation across income in real shares. Using a standard development accounting framework, I report large differences in productivity across countries for manufacturing categories. I also find some differences in productivity across countries for manufacturing sub-sectors, but these differences are smaller than the differences between manufacturing and services and considerably smaller than the differences across individual manufacturing categories.

Suggested Citation

  • Duarte, Margarida, 2020. "Manufacturing consumption, relative prices, and productivity," Journal of Macroeconomics, Elsevier, vol. 65(C).
  • Handle: RePEc:eee:jmacro:v:65:y:2020:i:c:s0164070420301580
    DOI: 10.1016/j.jmacro.2020.103232
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • E0 - Macroeconomics and Monetary Economics - - General

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