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IS A THEORY OF TOTAL FACTOR PRODUCTIVITY REALLY NEEDED?
Author(s) -
Felipe Jesus,
McCombie John S. L.
Publication year - 2007
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2007.00265.x
Subject(s) - total factor productivity , economics , argument (complex analysis) , productivity , order (exchange) , per capita , econometrics , per capita income , point (geometry) , neoclassical economics , positive economics , macroeconomics , mathematics , sociology , finance , population , biochemistry , chemistry , demography , geometry
This paper addresses the question of whether or not a theory of total factor productivity (TFP) is needed in order to explain the observed large per capita income differences across countries. As the argument that it is needed has been reached by calculating TFP empirically, we show that the way the estimates of TFP have been computed is not an innocuous issue. To illustrate our point, we discuss how two well‐known textbooks on growth theory present the arguments and the problems associated with these expositions. We conclude that the tautological nature of the estimates of TFP lies at the heart of an important question that the empirical literature on economic growth has been dealing with during recent years. Hence, our arguments cast doubt on the need for a theory of TFP.