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The biennial Malmquist productivity change index

Author

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  • Pastor, Jesús T.
  • Asmild, Mette
  • Lovell, C.A. Knox

Abstract

In this paper we introduce a new Malmquist productivity index that has three attractive features: it avoids linear programming infeasibilities under variable returns to scale, it allows for technical regress, and it does not need to be recomputed when a new time period is added to the data set. The proposed index is compared to both the adjacent Malmquist index and the global Malmquist index in an empirical example, which highlights the drawbacks of the existing indexes compared to the proposed biennial Malmquist index. Our results show that 13% of the observations in the data set may have to be ignored due to infeasibilities when decomposing the adjacent Malmquist index. Using only this reduced data set does at times lead to quite different results than those generated by applying the proposed biennial Malmquist index to the entire data set. The empirical example also shows that productivity change estimated between two time periods using the global Malmquist index change substantially when a third time period is added to the data set, whereas the proposed biennial Malmquist index is immune to this problem.

Suggested Citation

  • Pastor, Jesús T. & Asmild, Mette & Lovell, C.A. Knox, 2011. "The biennial Malmquist productivity change index," Socio-Economic Planning Sciences, Elsevier, vol. 45(1), pages 10-15, March.
  • Handle: RePEc:eee:soceps:v:45:y:2011:i:1:p:10-15
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    References listed on IDEAS

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    1. Victoria Shestalova, 2003. "Sequential Malmquist Indices of Productivity Growth: An Application to OECD Industrial Activities," Journal of Productivity Analysis, Springer, vol. 19(2), pages 211-226, April.
    2. Pastor, Jesus T. & Lovell, C.A. Knox, 2005. "A global Malmquist productivity index," Economics Letters, Elsevier, vol. 88(2), pages 266-271, August.
    3. Ray, Subhash C & Desli, Evangelia, 1997. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries: Comment," American Economic Review, American Economic Association, vol. 87(5), pages 1033-1039, December.
    4. Bert Balk, 2001. "Scale Efficiency and Productivity Change," Journal of Productivity Analysis, Springer, vol. 15(3), pages 159-183, May.
    5. Chambers Robert G. & Fare Rolf, 1994. "Hicks' Neutrality and Trade Biased Growth: A Taxonomy," Journal of Economic Theory, Elsevier, vol. 64(2), pages 554-567, December.
    6. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
    7. Jesús Pastor & C. Lovell, 2007. "Circularity of the Malmquist productivity index," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 33(3), pages 591-599, December.
    8. Mei Xue & Patrick T. Harker, 2002. "Note: Ranking DMUs with Infeasible Super-Efficiency DEA Models," Management Science, INFORMS, vol. 48(5), pages 705-710, May.
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    Cited by:

    1. repec:eee:jomega:v:75:y:2018:i:c:p:1-12 is not listed on IDEAS
    2. Agostino, Mariarosaria & Nifo, Annamaria & Trivieri, Francesco & Vecchione, Gaetano, 2016. "Total factor productivity heterogeneity: channelling the impact of institutions," MPRA Paper 72759, University Library of Munich, Germany.
    3. Liu, Guangtian & Wang, Bing & Zhang, Ning, 2016. "A coin has two sides: Which one is driving China’s green TFP growth?," Economic Systems, Elsevier, vol. 40(3), pages 481-498.
    4. Kao, Chiang, 2017. "Measurement and decomposition of the Malmquist productivity index for parallel production systems," Omega, Elsevier, vol. 67(C), pages 54-59.
    5. repec:bla:pacecr:v:22:y:2017:i:4:p:649-676 is not listed on IDEAS
    6. repec:kap:jproda:v:49:y:2018:i:1:d:10.1007_s11123-017-0523-5 is not listed on IDEAS
    7. Mahlberg, Bernhard & Luptacik, Mikulas & Sahoo, Biresh K., 2011. "Examining the drivers of total factor productivity change with an illustrative example of 14 EU countries," Ecological Economics, Elsevier, vol. 72(C), pages 60-69.
    8. Tang, Liwei & Hu, Zongyi, 2014. "生产要素、Fdi、环境污染与中国经济增长源泉——基于bm生产率指数的分解
      [Production factors, FDI, environmental depletion and sources of economic growth in China ——based on the decomposition of BM productivity index]
      ," MPRA Paper 59184, University Library of Munich, Germany.
    9. Mette Asmild & Tomas Baležentis & Jens Leth Hougaard, 2016. "Multi-directional productivity change: MEA-Malmquist," Journal of Productivity Analysis, Springer, vol. 46(2), pages 109-119, December.
    10. repec:spr:ariqol:v:12:y:2017:i:4:d:10.1007_s11482-016-9502-7 is not listed on IDEAS
    11. repec:spr:orspec:v:39:y:2017:i:3:d:10.1007_s00291-016-0465-8 is not listed on IDEAS
    12. Mohsen Afsharian & Heinz Ahn, 0. "Multi-period productivity measurement under centralized management with an empirical illustration to German saving banks," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 0, pages 1-31.

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