TFP Growth and its Determinants: Nonparametrics and Model Averaging

34 Pages Posted: 6 Apr 2011

See all articles by Michael Danquah

Michael Danquah

University of Wales, Swansea

Enrique Moral-Benito

Banco de España; Universidad Carlos III de Madrid

Bazoumana Ouattara

University of Wales

Date Written: April 5, 2011

Abstract

Total Factor Productivity (TFP) accounts for a sizeable proportion of the income and growth differences across countries. Two challenges remain to researchers aiming to explain these differences: on the one hand, TFP growth is hard to measure; on the other hand, model uncertainty hampers consensus on its key determinants. This paper combines a non-parametric measure of TFP growth with model averaging techniques to addess both issues. The empirical findings suggest that the most robust TFP growth determinants are unobserved heterogeneity, initial GDP, consumption share, and trade openness. We also investigate the main determinants of the TFP components: efficiency change (i.e. catching up) and technological progress (i.e. innovation).

Keywords: Productivity, Bayesian Model Averaging, Nonparametric methods

JEL Classification: O47, C11, C14, C23

Suggested Citation

Danquah, Michael and Moral-Benito, Enrique and Ouattara, Bazoumana, TFP Growth and its Determinants: Nonparametrics and Model Averaging (April 5, 2011). Banco de Espana Working Paper No. 1104. Available at SSRN: https://ssrn.com/abstract=1803371 or http://dx.doi.org/10.2139/ssrn.1803371

Michael Danquah (Contact Author)

University of Wales, Swansea ( email )

Singleton Park
Swansea, SA2 8PP
United Kingdom
+0044(0)1792 20 25 30 (Phone)

Enrique Moral-Benito

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Universidad Carlos III de Madrid ( email )

CL. de Madrid 126
Madrid, Madrid 28903
Spain

Bazoumana Ouattara

University of Wales ( email )

Singleton Park
Swansea, Wales SA2 8PP
United Kingdom

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