Estimation of Cross-Country Differences in Industry Production Functions

48 Pages Posted: 27 Feb 1998

See all articles by James Harrigan

James Harrigan

University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: January 1998

Abstract

International trade economists typically assume that there are no cross-country differences in industry total factor productivity (TFP). In contrast, this paper finds large and persistent TFP differences across a group of industrialized countries in the 1980s. The paper calculates TFP indices, and statistically examines the sources of the observed large TFP differences across countries. Two hypotheses are examined to account for TFP differences: constant returns to scale production with country-specific technological differences, and industry-level scale economies with identical technology in each country. The data support the constant returns/different technology hypothesis over the increasing returns/same technology hypothesis.

Keywords: otal factor productivity, scale economics

JEL Classification: F1, D24, O47

Suggested Citation

Harrigan, James, Estimation of Cross-Country Differences in Industry Production Functions (January 1998). FRB of New York Staff Report No. 36. Available at SSRN: https://ssrn.com/abstract=46829 or http://dx.doi.org/10.2139/ssrn.46829

James Harrigan (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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