Alternative Measures of Total Factor Productivity Growth

Abstract:     
The four main approaches to the measurement of total factor productivity (TFP)-growth and its decomposition are (i) Solow's residual analysis, (ii) the Index Number Approach, (iii) Input-Output Analysis (IO), and (iv) Data Envelopment Analysis (DEA). The corresponding measures of TFP growth are based on different assumptions, which we expose and interrelate. The Solow Residual serves as the benchmark for our comparisons. The interrelationships between the alternative measures permit an interpretation of the differences among them. We consolidate the four alternative measures in a common framework.

Number of Pages in PDF File: 21

Keywords: TFP, Solow residual, Index numbers, Input-output, DEA

JEL Classification: O47, C67

working papers series