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Where is the Primal Total Factor Productivity Index?
Author(s) -
Antonio Peyrache
Publication year - 2010
Publication title -
ssrn electronic journal
Language(s) - English
Resource type - Journals
ISSN - 1556-5068
DOI - 10.2139/ssrn.1654288
Subject(s) - index (typography) , factor (programming language) , total factor productivity , productivity , statistics , mathematics , economics , computer science , macroeconomics , programming language , world wide web
A primal index of productivity change is introduced which decomposes exactly in three components: technical change, technical efficiency change and average scale economies (radial scale change). The proposed index is invariant to movement along indifference surfaces and it collapses to the Malmquist index if the technology is locally constant returns to scale. It is the best linear approximation of the Orea (2002) translog productivity index (primal growth accounting). The existing proposals for the primal productivity index are discussed in detail. An empirical illustration on real data is provided to show the magnitude of the residuals associated to the lack of indifference surface invariance for these indexes.

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