Productivity trends in U.S. manufacturing: Evidence from the NQ and AIM cost functions

Feng, Guo-Hua; Serletis, Apostolos

doi:10.1016/j.jeconom.2007.06.002

Cited by 68 publications

(67 citation statements)

References 57 publications

(77 reference statements)

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“…The value-added approach therefore implicitly assumes that technical change only operates on capital and labour inputs, and that all other inputs are used in fixed proportions. Generally, the hypothesis that technology affects only primary inputs has not held up to empirical verification, and technical change has been observed to be a complex process, with some changes affecting all factors of production simultaneously, while other types of change affect individual factors of production separately [38]. Furthermore, the value-added approach does not correspond directly to a specific model of production [39].…”

Section: (B) Intermediate Inputs In Economic Production Functionsmentioning

confidence: 99%

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Intermediate inputs and economic productivity

Baptist

Hepburn

2013

Phil. Trans. R. Soc. A.

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Many models of economic growth exclude materials, energy and other intermediate inputs from the production function. Growing environmental pressures and resource prices suggest that this may be increasingly inappropriate. This paper explores the relationship between intermediate input intensity, productivity and national accounts using a panel dataset of manufacturing subsectors in the USA over 47 years. The first contribution is to identify sectoral production functions that incorporate intermediate inputs, while allowing for heterogeneity in both technology and productivity. The second contribution is that the paper finds a negative correlation between intermediate input intensity and total factor productivity (TFP)—sectors that are less intensive in their use of intermediate inputs have higher productivity. This finding is replicated at the firm level. We propose tentative hypotheses to explain this association, but testing and further disaggregation of intermediate inputs is left for further work. Further work could also explore more directly the relationship between material inputs and economic growth—given the high proportion of materials in intermediate inputs, the results in this paper are suggestive of further work on material efficiency. Depending upon the nature of the mechanism linking a reduction in intermediate input intensity to an increase in TFP, the implications could be significant. A third contribution is to suggest that an empirical bias in productivity, as measured in national accounts, may arise due to the exclusion of intermediate inputs. Current conventions of measuring productivity in national accounts may overstate the productivity of resource-intensive sectors relative to other sectors.

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Section: (B) Intermediate Inputs In Economic Production Functionsmentioning

confidence: 99%

“…Our approach is different to the standard 'growth accounting' approach [38,48]. The growth accounting approach is to use a non-parametric technique that weights different types or qualities of factors by income shares [49,50].…”

Section: (C) Estimation Strategymentioning

confidence: 99%

Intermediate inputs and economic productivity

Baptist

Hepburn

2013

Phil. Trans. R. Soc. A.

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“…Our results suggest that a flexible form that allows for the global imposition of curvature restrictions may not be the best choice, contrary to the recommendation of Feng and Serletis (2007). When the number of curvature violations associated with a TL can be eliminated by choosing an appropriate date for the imposition of local curvature conditions, one must rely on the plausibility of elasticities and/or forecast accuracy to make a determination.…”

Section: Resultsmentioning

confidence: 75%

“…All estimations were performed with the nonlinear command in TSP/Givewin for the Translog functional form and Shazam for the SNQ specification. 9 The starting values for each optimization were chosen randomly.…”

Section: Data and Estimation Methodsmentioning

confidence: 99%

Imposing Curvature Conditions on Flexible Functional Forms for GNP Functions

Nana

Larue

2012

SSRN Journal

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Abstract:This paper empirically investigates the implications of the imposition of convexity in output prices and concavity in factor endowments on flexible functional forms for the GNP function. Using macroeconomic data for Switzerland, we estimate the Translog and the Symmetric Normalized Quadratic forms to investigate the manner with which curvature restrictions are imposed, the extend of curvature violations and the robustness of estimated elasticities. We also compare the predictive accuracy of the aforementioned flexible functional forms. Our result show that concavity in factor endowments is violated much more often than convexity in output prices. For the Translog, the date at which local restrictions are imposed matters a great deal in terms of remaining curvature violations in the sample, but far less for estimated elasticities. In contrast, we found that the size and sign of elasticities vary across functional forms. In-sample forecasting analysis demonstrates that the Translog model significantly dominates the Symmetric Normalized Quadratic. Keywords: GNP function, flexible functional forms, curvature violations, elasticitiesClassification JEL: D24, C30 Résumé:Ce papier analyse empiriquement l'impact de l'imposition de la convexité dans le prix des biens produits et de la concavité dans les quantités de facteurs de production sur l'estimation des formes fonctionnelles flexibles dans le cadre des fonctions de Produit National Brut (PNB). En utilisant les données macroéconomiques de la Suisse, nous estimons les formes fonctionnelles Translog et Quadratique Symétrique Normalisée avec et sans imposition des conditions de courbures, et enquêtons sur l'étendue de la violation des restrictions et la robustesse des élasticités estimées. Nous évaluons également la capacité prédictive intra-échantillon des deux formes fonctionnelles. Nos résultats montrent que la concavité dans la dotation en facteurs est violée plus souvent que la convexité dans le prix des biens produits. Pour la Translog, la date à laquelle les restrictions locales sont imposées a un impact important sur le nombre de violations des conditions de courbure et cela sur l'ensemble de l'échantillon, mais a peu d'influence sur les élasticités estimées. En revanche, nous avons constaté que la taille et le signe des élasticités varient selon les deux formes fonctionnelles. L'analyse du pouvoir prédictif intra-échantillon montre que la forme Translog domine nettement la Quadratique Symétrique Normalisée.

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“…We employ functional equation techniques to identify the functional forms that satisfy the aforementioned properties as well as flexibility and linearity in parameters, i.e., they satisfy properties from economic theory as well as providing practical empirical properties. In contrast, in a recent study Feng and Serletis (2008) state that '...there is no a priori view as to which flexible functional forms are appropriate...' Our goal is to suggest a fruitful alternative to this view. 1 …”

Section: Introductionmentioning

confidence: 90%

Generalized Quadratic Revenue Functions

et al. 2008

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Productivity trends in U.S. manufacturing: Evidence from the NQ and AIM cost functions

Cited by 68 publications

References 57 publications

Intermediate inputs and economic productivity

Intermediate inputs and economic productivity

Imposing Curvature Conditions on Flexible Functional Forms for GNP Functions

Generalized Quadratic Revenue Functions

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