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The Solow Residual, Domar Aggregation, and Inefficiency: A Synthesis of TFP Measures

In: Efficiency and Input-Output Analyses Theory and Applications

Author

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  • Thijs ten Raa
  • Victoria Shestalova

Abstract

We consolidate and interrelate the four main approaches to the measurement and decomposition of total factor productivity growth, namely Solow’s residual analysis, the index number approach, Data Envelopment Analysis, and Domar aggregation. Two new results link the general technology TFP growth measure to the industry Solow residuals and inefficiency.

Suggested Citation

  • Thijs ten Raa & Victoria Shestalova, 2021. "The Solow Residual, Domar Aggregation, and Inefficiency: A Synthesis of TFP Measures," World Scientific Book Chapters, in: Efficiency and Input-Output Analyses Theory and Applications, chapter 2, pages 23-38, World Scientific Publishing Co. Pte. Ltd..
    • Handle: RePEc:wsi:wschap:9789811233296_0002
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    2. Diogo Cunha Ferreira & Rui Cunha Marques, 2016. "Malmquist and Hicks–Moorsteen Productivity Indexes for Clusters Performance Evaluation," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 15(05), pages 1015-1053, September.
    3. Michael Peneder & Fabian Unterlass, 2024. "Die Produktivitätsentwicklung österreichischer Unternehmen in den Jahren 2013 bis 2020. Eine Auswertung von Mikrodaten," WIFO Monatsberichte (monthly reports), WIFO, vol. 97(1), pages 43-56, February.
    4. Jakub Growiec, 2013. "On the measurement of technological progress across countries," Bank i Kredyt, Narodowy Bank Polski, vol. 44(5), pages 467-504.
    5. Kazekami, Sachiko, 2024. "Linkage, sectoral productivity, and employment spread," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 108-123.
    6. Tian, Xu & Yu, Xiaohua, 2012. "The Enigmas of TFP in China: A meta-analysis," China Economic Review, Elsevier, vol. 23(2), pages 396-414.
    7. Yang, Fuxia & Yang, Mian & Nie, Hualin, 2013. "Productivity trends of Chinese regions: A perspective from energy saving and environmental regulations," Applied Energy, Elsevier, vol. 110(C), pages 82-89.
    8. Shaohua Zhang & Tzu-Pu Chang & Li-Chuan Liao, 2020. "A Dual Challenge in China’s Sustainable Total Factor Productivity Growth," Sustainability, MDPI, vol. 12(13), pages 1-17, July.
    9. Hui Li & Xiaqing Peng & Jingxiao Zhang & Pablo Ballesteros-Perez & Simon Patrick Philbin & Zhaoling Li & Xiaoying Tang & Jiawei Cheng, 2025. "Enabling the green total factor productivity of the construction industry with the prospect of digital transformation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(7), pages 15339-15366, July.
    10. Burda, Michael C. & Severgnini, Battista, 2014. "Solow residuals without capital stocks," Journal of Development Economics, Elsevier, vol. 109(C), pages 154-171.
    11. Theo Santini & Ricardo Azevedo Araujo, 2021. "Productivity growth and sectoral interactions under Domar aggregation: a study for the Brazilian economy from 2000 to 2014," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 10(1), pages 1-30, December.
    12. Michael Peneder & Catherine Prettner, 2021. "Entwicklung der Produktivität österreichischer Unternehmen von 2008 bis 2018. Auswertung von Mikrodaten für Österreich im Rahmen von Multiprod 2.0," WIFO Studies, WIFO, number 67450.
    13. Peneder, Michael & Rammer, Christian (ed.), 2018. "Measuring Competitiveness," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 181906.
    14. Bert M. Balk, 2015. "Measuring and relating aggregate and subaggregate total factor productivity change without neoclassical assumptions," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 69(1), pages 21-48, February.
    15. Michael Peneder & Christian Rammer, 2018. "Measuring Competitiveness," WIFO Studies, WIFO, number 60838.
    16. Hong Yu & Jianmin Zhang & Ning Xu, 2023. "Does National Independent Innovation Demonstration Zone Construction Help Improve Urban Green Total Factor Productivity? A Policy Assessment from China," Sustainability, MDPI, vol. 15(9), pages 1-16, April.
    17. Zhao, Xin & Nakonieczny, Joanna & Jabeen, Fauzia & Shahzad, Umer & Jia, Wenxing, 2022. "Does green innovation induce green total factor productivity? Novel findings from Chinese city level data," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    18. Karina Alfaro‐Moreno & José Javier Núñez‐Velázquez & Luisa Fernanda Bernat‐Diaz, 2019. "How does wage polarization affect productivity? The case of Spanish regions," Papers in Regional Science, Wiley Blackwell, vol. 98(3), pages 1317-1333, June.

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    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D - Microeconomics

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