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Neoclassical Growth Accounting and Frontier Analysis : A Synthesis

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  • Ten Raa, T.

    (Tilburg University, School of Economics and Management)

  • Mohnen, P.

Abstract

The standard measure of productivity growth is the Solow residual. Its evaluation requires data on factor input shares or prices. Since these prices are presumed to match factor productivities, the standard procedure amounts to accepting at face value what is supposed to be measured. In this paper, we determine total factor productivity growth without recourse to data on factor input prices. Factor productivities are defined as Lagrange multipliers to the program that maximizes the level of domestic final demand. The consequent measure of total factor productivity is shown to encompass not only the Solow residual, but also the efficiency change of the frontier analysis and the hitherto slippery terms of-trade effect. Using input–output tables from 1962 to 1991, we show that the source of Canadian productivity growth has shifted from technical change to terms-of-trade effects.
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Suggested Citation

  • Ten Raa, T. & Mohnen, P., 2000. "Neoclassical Growth Accounting and Frontier Analysis : A Synthesis," Other publications TiSEM 0dd836d2-9efc-49d7-bac8-2, Tilburg University, School of Economics and Management.
    • Handle: RePEc:tiu:tiutis:0dd836d2-9efc-49d7-bac8-2bd844630e0c
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    References listed on IDEAS

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    1. Fare, Rolf & Grosskopf, Shawna, 1996. "Productivity and intermediate products: A frontier approach," Economics Letters, Elsevier, vol. 50(1), pages 65-70, January.
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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F37 - International Economics - - International Finance - - - International Finance Forecasting and Simulation: Models and Applications
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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