Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83575
Authors: 
Kátay, Gábor
Wolf, Zoltán
Year of Publication: 
2008
Series/Report no.: 
MNB Working Papers 2008/6
Abstract: 
Applications tend to ignore that measured TFP reflects the variation of output that cannot be explained by changes in inputs. Such a change is not necessarily technological, so measured TFP differences across firms are an amalgam of technological, efficiency and other differences in attributes, which calls for further refinement in the treatment of TFP. To control for cyclical effects, we modify a standard technique in firmlevel production function estimation using a capacity utilization proxy. Based on a large panel of Hungarian manufacturing firms, we decompose value added growth to input factor, capacity utilization and estimated TFP growth contributions. We find that using an hours worked proxy, the variance of the residual drops considerably. We also find that TFP's role has not been stable over the period: it contributed to value added growth mostly in periods when/after institutional reforms, privatization or FDI inflow took place and lost its importance several years after the shocks.
Subjects: 
economic growth
production function
input factor contributions
total factor productivity
capacity utilization
aggregation
panel data
JEL: 
C14
C23
D24
O12
O47
Document Type: 
Working Paper

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