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On the Sensitivity of Aggregate Productivity Growth Rates to Noisy Measurement


  • Frank T. Denton


Aggregate rates of productivity growth are among the most closely watched indicators of economic performance. They are also among the most difficult to measure accurately. This paper explores the sensitivity of such rates to random measurement error using a simple generic model. The model allows for errors in the input and output components of the productivity ratio, with different variances, and for serial and cross correlation of the errors. The effects of the errors are considered from the point of view of growth rates themselves, changes in growth rates, and comparisons between rates in different countries.

Suggested Citation

  • Frank T. Denton, 2007. "On the Sensitivity of Aggregate Productivity Growth Rates to Noisy Measurement," Quantitative Studies in Economics and Population Research Reports 415, McMaster University.
  • Handle: RePEc:mcm:qseprr:415

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    References listed on IDEAS

    1. Kevin Milligan, 2008. "The Evolution of Elderly Poverty in Canada," Canadian Public Policy, University of Toronto Press, vol. 34(s1), pages 79-94, November.
    2. Thomas F. Crossley & Krishna Pendakur, 2002. "Consumption Inequality," Department of Economics Working Papers 2002-09, McMaster University.
    3. Lars Osberg, 2001. "Poverty Among Senior Citizens: A Canadian Success Story," The State of Economics in Canada: Festschrift in Honour of David Slater,in: Patrick Grady & Andrew Sharpe (ed.), The State of Economics in Canada: Festschrift in Honour of David Slater, pages 151-181 Centre for the Study of Living Standards.
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    More about this item


    productivity; growth rates; measurement error;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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