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Return to Dollar, Generalized Distance Function and the Fisher Productivity Index

Author

Listed:
  • Zofío, José Luis

    () (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid)

  • Prieto, Angel

    (Ministerio de Educación y Ciencia - C.S.I.C.)

Abstract

Exploring the duality between a return to dollar definition of profit and the generalized distance function we establish the relationship between the Laspeyres, Paasche and Fisher productivity indexes and their alternative Malmquist indexes counterparts. By proceeding this way, we propose a consistent decomposition of these productivity indexes into two mutually exclusive components. A technical component represented by the Malmquist index and an economical component which can be identified with the contribution that allocative criteria make to productivity change. With regard to the Fisher index, we indicate how researchers can further decompose the Malmquist technical component rendering explicit the sources of productivity change. We also show how the proposed model can be implemented by means of Data Envelopment Analysis techniques, and illustrate the empirical process with an example data set.

Suggested Citation

  • Zofío, José Luis & Prieto, Angel, 2005. "Return to Dollar, Generalized Distance Function and the Fisher Productivity Index," Working Papers in Economic Theory 2005/01, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
  • Handle: RePEc:uam:wpaper:200501
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    File URL: http://www.uam.es/departamentos/economicas/analecon/especifica/mimeo/WP12005Red.pdf
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    References listed on IDEAS

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    1. McFadden, Daniel, 1978. "Cost, Revenue, and Profit Functions," Histoy of Economic Thought Chapters,in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 1 McMaster University Archive for the History of Economic Thought.
    2. 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.
    3. C. Lovell, 2003. "The Decomposition of Malmquist Productivity Indexes," Journal of Productivity Analysis, Springer, vol. 20(3), pages 437-458, November.
    4. Harberger, Arnold C, 1998. "A Vision of the Growth Process," American Economic Review, American Economic Association, vol. 88(1), pages 1-32, March.
    5. E. Grifell-Tatjé & C. Lovell, 1999. "A generalized Malmquist productivity index," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 7(1), pages 81-101, June.
    6. Erwin Diewert & Denis Lawrence, 1999. "Measuring New Zealand’s Productivity," Treasury Working Paper Series 99/05, New Zealand Treasury.
    7. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Books, National Bureau of Economic Research, Inc, number abra56-1, January.
    8. Fare, Rolf & Grosskopf, Shawna & Zaim, Osman, 2002. "Hyperbolic efficiency and return to the dollar," European Journal of Operational Research, Elsevier, vol. 136(3), pages 671-679, February.
    9. Jean-Paul Chavas & Thomas L. Cox, 1999. "A Generalized Distance Function and the Analysis of Production Efficiency," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 294-318, October.
    10. Moses Abramovitz, 1956. "Resource and Output Trends in the United States Since 1870," NBER Chapters,in: Resource and Output Trends in the United States Since 1870, pages 1-23 National Bureau of Economic Research, Inc.
    11. Diewert, W E, 1992. "The Measurement of Productivity," Bulletin of Economic Research, Wiley Blackwell, vol. 44(3), pages 163-198, July.
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    Cited by:

    1. repec:pal:jorsoc:v:68:y:2017:i:5:d:10.1057_s41274-016-0129-8 is not listed on IDEAS
    2. Lee, Chia-Yen & Johnson, Andrew L., 2012. "Two-dimensional efficiency decomposition to measure the demand effect in productivity analysis," European Journal of Operational Research, Elsevier, vol. 216(3), pages 584-593.
    3. repec:spr:scient:v:94:y:2013:i:1:d:10.1007_s11192-012-0763-0 is not listed on IDEAS
    4. Jiménez, Fernando & Zabala Iturriagagoitia, Jon Mikel & Zofío, José Luis, 2007. "Efficiency in Public Research Centers: Evaluating the Spanish Food Technology Program," Working Papers in Economic Theory 2007/04, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    5. Jiménez-Sáez, Fernando & Zabala-Iturriagagoitia, Jon Mikel & Zofío, José L. & Castro-Martínez, Elena, 2011. "Evaluating research efficiency within National R&D Programmes," Research Policy, Elsevier, vol. 40(2), pages 230-241, March.
    6. Kumbhakar, Subal C., 2011. "Estimation of production technology when the objective is to maximize return to the outlay," European Journal of Operational Research, Elsevier, vol. 208(2), pages 170-176, January.

    More about this item

    Keywords

    Generalized Distance Function; Return to Dollar; Fisher and Malmquist Productivity Indexes;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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