Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192455 
Year of Publication: 
2006
Series/Report no.: 
Discussion Papers No. 473
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
Productivity measures ignoring environmental effects may give misleading information on total productivity growth. Further, business cycles in the form of capacity utilization may also significantly influence productivity measures. In this paper, we develop an overall Malmquist productivity index and decompose changing efficiency rates into a contribution from environmental factors, capacity utilization and other traditional factors. The capacity utilization element is a contribution to the literature in that it takes into account the capacity for producing negative externalities. We decompose the frontier movements into a contribution from traditional factors and environmental factors and apply the model to a micro data set for two Norwegian industries: the pulp and paper industry and the inorganic chemistry industry. We find frontier improvements over the period included in the analysis, while the distance to the frontier has increased. Capacity utilization increased over the period and contributed to an average approach to the frontier, while environmental indicators contributed negatively. Analysis of the two industries indicates that differences between the traditional and revised efficiency measures changes are ambiguous, except from the capacity utilization element. This indicates that the environment loses when business cycles improve.
Subjects: 
Emissions
Productivity change
Pulp and paper
Inorganic chemistry
Malmquist index
Frontier technology
Capacity utilization
JEL: 
L73
O12
O14
O33
O41
Q48
R38
Document Type: 
Working Paper

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