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Reconciling Gross Output TFP Growth with Value Added TFP Growth

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  • Erwin Diewert

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Abstract

This article obtains relatively simple exact expressions that relate value added total factor productivity growth (TFP) in a value added framework to the corresponding measures of TFP growth in a gross output framework when Laspeyres or Paasche indexes are used to aggregate outputs and inputs. Basically, as the input base becomes smaller, the corresponding estimates of TFP growth become larger. A fairly simple approximate relationship between Fisher indexes of gross output TFP growth and the corresponding Fisher index of value added TFP growth is also derived. The methodology developed in this article has a number of applications.

Suggested Citation

  • Erwin Diewert, 2015. "Reconciling Gross Output TFP Growth with Value Added TFP Growth," International Productivity Monitor, Centre for the Study of Living Standards, vol. 29, pages 60-67, Fall.
  • Handle: RePEc:sls:ipmsls:v:29:y:2015:4
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    File URL: http://www.csls.ca/ipm/29/diewert.pdf
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    References listed on IDEAS

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    1. W. Erwin Diewert & Emily Yu, 2012. "New Estimates of Real Income and Multifactor Productivity Growth for the Canadian Business Sector, 1961-2011," International Productivity Monitor, Centre for the Study of Living Standards, vol. 24, pages 27-48, Fall.
    2. W. Diewert, 2014. "US TFP growth and the contribution of changes in export and import prices to real income growth," Journal of Productivity Analysis, Springer, vol. 41(1), pages 19-39, February.
    3. Balk, Bert M., 2009. "On The Relation Between Gross Output– And Value Added–Based Productivity Measures: The Importance Of The Domar Factor," Macroeconomic Dynamics, Cambridge University Press, vol. 13(S2), pages 241-267, September.
    4. Paul Schreyer, 2001. "The OECD Productivity Manual: A Guide to the Measurement of Industry-Level and Aggregate Productivity," International Productivity Monitor, Centre for the Study of Living Standards, vol. 2, pages 37-51, Spring.
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    Cited by:

    1. Alexander Murray, 2016. "Partial versus Total Factor Productivity: Assessing Resource Use in Natural Resource Industries in Canada," CSLS Research Reports 2016-20, Centre for the Study of Living Standards.

    More about this item

    Keywords

    Value Added Total Factor Productivity; Total Factor Productivity; Laspeyres; Paasche; Fisher; Gross Output Total Factor Productivity;

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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