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Total factor productivity - a misleading concept
- Article from:
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Banca Nazionale del Lavoro Quarterly Review
- Article date:
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September 1, 2001
- Author:
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Copyright informationCopyright BNL Edizioni Sep 2001. Provided by ProQuest LLC. (Hide copyright information)
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Total factor productivity - a misleading concept*
1. Introduction
In real business cycle models, growth accounting, as in empirical research on the link between R&D spending and economic performance, the indicator usually chosen for productivity is total factor productivity - a concept that derives from a neoclassical production function (a Cobb-Douglas in the overwhelming majority of cases). In this paper I criticise this concept as a measure of technical change and economic performance on two grounds: i) theoretical; ii) relevance to an understanding of present technological change. Criticisms of the sort can be found here and there in the literature, but the problem is that in ...