Estimation and Decomposition of Total Factor Productivity Growth in the EU Manufacturing Sector: A Stochastic Frontier Approach
ISTAT - Italian National Institute of Statistics
July 3, 2009
In this paper the Stochastic Frontier approach was used for the estimation and decomposition of manufacturing TFP growth in 14 EU member countries, drawing upon the EU-KLEMS database. This study identifies some key issues: in the period 1970-2005, the TFP rate of change in the EU manufacturing sector constantly decreased, mainly due to the reduction in technical efficiency and, to a lesser extent, to the decline in the rate of growth of input factors and allocative efficiency. In the same period, the sector recorded considerable technical progress, which, nonetheless, did not offset the negative forces which pulled the EU TFP growth down, especially in the last decade of the sample period.
Number of Pages in PDF File: 29
Keywords: Stochastic frontier Total Factor Productivity, Technical efficiency, Technical change, Allocative efficiency
JEL Classification: D24, O47, C33working papers series
Date posted: July 6, 2009 ; Last revised: July 10, 2009
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