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Decomposing Malmquist Productivity Indexes into Explanatory Factors

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  • Diewert, Erwin
  • Fox, Kevin

Abstract

Caves, Christensen, Diewert introduced Malmquist output, input and productivity indexes into production theory in a systematic way. These indexes use distance functions to represent the technology. In recent years, there have been many attempts to decompose Malmquist productivity indexes into explanatory components. This paper revisits this debate of how to decompose a Malmquist productivity index into explanatory factors, with a focus on extracting technical progress, technical efficiency change, and returns to scale components. In order to define these components, a reference technology is required. The paper does not make any convexity assumptions on the reference technology but instead follows the example of Tulkens and his coauthors in assuming that the reference technology satisfies free disposability assumptions.

Suggested Citation

  • Diewert, Erwin & Fox, Kevin, 2013. "Decomposing Malmquist Productivity Indexes into Explanatory Factors," Economics working papers erwin_diewert-2013-39, Vancouver School of Economics, revised 18 Sep 2013.
  • Handle: RePEc:ubc:bricol:erwin_diewert-2013-39
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    File URL: http://www.economics.ubc.ca/faculty-and-staff/w-erwin-diewert/
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    Cited by:

    1. Diewert, W. Erwin & Fox, Kevin J., 2014. "Reference technology sets, Free Disposal Hulls and productivity decompositions," Economics Letters, Elsevier, vol. 122(2), pages 238-242.

    More about this item

    Keywords

    Productivity indexes; Malmquist indexes; technical efficiency; technical progress; returns to scale; Data Envelopment Analysis; Free Disposal Hulls; n;

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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