Economics Dictionary of ArgumentsHome
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| Total Factor Productivity: Total Factor Productivity (TFP) measures the efficiency with which an economy uses its inputs (like labor and capital) to produce output. It's often considered a "residual," representing the portion of economic growth not explained by increases in measurable inputs. TFP growth is driven by technological advancements, innovation, and improvements in organizational practices. See also Labor, Productivity, Capital, Factors of production. _____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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Robert Solow on Total Factor Productivity (TFP) - Dictionary of Arguments
Feenstra I 10-40 Total Factor Productivity/Solow/Feenstra: The measure of total factor productivity (TFP) due to Solow (1957)(1) is the growth of output minus a weighted average of the growth of inputs. The weights equal the elasticity of output with respect to the inputs. Feenstra I 10-41 Under perfect competition and constant returns to scale, these weights are easily measured by the revenue-shares of the inputs. >Perfect competition, >Imperfect competition, >Factors of production, >Productivity. Without these assumptions, however, the measurement of productivity growth becomes more difficult. Using the techniques of Hall (1988)(2), (…) “true” productivity growth can be identified, along with estimating the price-cost margins and returns to scale in an industry. This technique has been applied by Levinsohn (1993)(3) and Harrison (1994)(4) to measure the reduction in markups following liberalization in Turkey and the Ivory Coast, respectively. 1. Solow, Robert M., 1957, “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, 39, 312-320. 2. Hall, Robert, 1988, “The Relation between Price and Marginal Cost in U.S. Industry,” Journal of Political Economy, 96, 921-947. 3. Levinsohn, James, 1993, “Testing the Imports-As-Market-Discipline Hypothesis,” Journal of International Economics, August, 35(1/2), 1-22. 4. Harrison, Ann E., 1994, “Productivity, imperfect competition and trade reform: Theory and evidence,” February, 36(1/2), 53-73._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Solow I Robert M. Solow A Contribution to the Theory of Economic Growth Cambridge 1956 Feenstra I Robert C. Feenstra Advanced International Trade University of California, Davis and National Bureau of Economic Research 2002 |
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