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POn Fisher Aggregation of Multi-factor Productivity Indexes

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Abstract
The goal of this paper is to investigate the question of importance of Fisher aggregation of the Paasche and Laspeyres versions of Malmquist quantity and productivity indexes from both theoretical and empirical perspectives. We discuss existing justification and provide an alternative theoretical justification based on results from functional equations literature. We also use real data (from Kumar and Russell (2002, American Economic Review)) to illustrate how dramatic the differences in conclusions can be in practice depending on whether one employs Laspeyres or Paasche productivity indexes.

Suggested Citation

  • Rolf Färe & Valentin Zelenyuk, 2020. "POn Fisher Aggregation of Multi-factor Productivity Indexes," CEPA Working Papers Series WP082020, School of Economics, University of Queensland, Australia.
    • Handle: RePEc:qld:uqcepa:151
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    File URL: https://economics.uq.edu.au/files/19689/WP082020.pdf
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    6. Balk,Bert M., 2012. "Price and Quantity Index Numbers," Cambridge Books, Cambridge University Press, number 9781107404960.
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    8. Park, Byeong U. & Simar, Léopold & Zelenyuk, Valentin, 2008. "Local likelihood estimation of truncated regression and its partial derivatives: Theory and application," Journal of Econometrics, Elsevier, vol. 146(1), pages 185-198, September.
    9. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, September.
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    11. Samuelson, Paul A & Swamy, S, 1974. "Invariant Economic Index Numbers and Canonical Duality: Survey and Synthesis," American Economic Review, American Economic Association, vol. 64(4), pages 566-593, September.
    12. Färe, Rolf & Zelenyuk, Valentin, 2019. "On Luenberger input, output and productivity indicators," Economics Letters, Elsevier, vol. 179(C), pages 72-74.
    13. John R. Hicks, 1961. "The Measurement of Capital in Relation to the Measurement of Other Economic Aggregates," International Economic Association Series, in: D. C. Hague (ed.), The Theory of Capital, chapter 0, pages 18-31, Palgrave Macmillan.
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    17. Caves, Douglas W & Christensen, Laurits R & Diewert, W Erwin, 1982. "The Economic Theory of Index Numbers and the Measurement of Input, Output, and Productivity," Econometrica, Econometric Society, vol. 50(6), pages 1393-1414, November.
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    More about this item

    Keywords

    Fisher; Laspeyres; Paasche; Malmquist; Productivity Indexes;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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