Productivity Measurement: Racing to Keep Up

Posted: 4 Sep 2019

Multiple version iconThere are 2 versions of this paper

Date Written: August 2019

Abstract

This article provides a nontechnical review of the literature and issues related to the measurement of aggregate productivity. I begin with a discussion of productivity measures, their performance in recent decades, and key measurement puzzles that emerge from the data. The remainder of the review focuses on two important questions. First, how do we make more accurate the measures of prices used to deflate nominal output so as to win (or at least not lose) the race for economic measurement to keep up with a changing economy? I frame the issues and point to the most important and promising areas for further research. Second, what does or should GDP measure? I defend GDP as a valuable measure of production and offer suggestions for improving it. At the same time, I emphasize the importance of measuring economic welfare (well-being) and argue that GDP should be supplemented with a satellite account that measures economic welfare.

Suggested Citation

Sichel, Daniel E., Productivity Measurement: Racing to Keep Up (August 2019). Annual Review of Economics, Vol. 11, pp. 591-614, 2019. Available at SSRN: https://ssrn.com/abstract=3445909 or http://dx.doi.org/10.1146/annurev-economics-080218-030439

Daniel E. Sichel (Contact Author)

Wellesley College ( email )

106 Central St.
Wellesley, MA 02181
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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