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Decomposition of Output Growth in the Presence of Input Quality: A Stochastic Frontier Approach

Author

Listed:
  • Yasmina Rim Limam

    (Faculté des Sciences Économiques et de Gestion de Nabeul and Institutions and Political Economy Group (IPEG), University of the Witwatersrand)

  • Stephen M. Miller

    (University of Nevada, Las Vegas and University of Connecticut)

  • Giampaolo Garzarelli

    (Università di Roma and Institutions and Political Economy Group (IPEG), University of the Witwatersrand)

Abstract

How do physical capital accumulation and Total Factor Productivity (TFP) individually add to economic growth? We approach this question from the perspective of the quality of both labor and physical capital, namely human capital and the age of physical capital. We build a unique dataset by explicitly calculating the age of physical capital for each year of our time frame and estimate a stochastic frontier production function incorporating input quality in five groups of countries (Africa, East Asia, Latin America, South Asia, and West). Quality of capital significantly and positively affects output growth in three groups. The decomposition of output growth demonstrates that factor growth generally proves much more important than either the improved quality of factors or TFP growth in explaining output growth.

Suggested Citation

  • Yasmina Rim Limam & Stephen M. Miller & Giampaolo Garzarelli, 2016. "Decomposition of Output Growth in the Presence of Input Quality: A Stochastic Frontier Approach," Working papers 2016-13, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2016-13
    Note: Yasmina Rim Limam is the corresponding author
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    References listed on IDEAS

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    More about this item

    Keywords

    Age of Physical Capital; Growth Accounting; Output Growth; Technical Efficiency;

    JEL classification:

    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • 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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