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The mystery of TFP

Oulton, Nicholas (2016) The mystery of TFP. International Productivity Monitor, 31. ISSN 1492-9759

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The objective of this article is to critically examine explanations of Total Factor Productivity (TFP) growth. TFP growth is analysed at the sectoral and aggregate level, using data for 10 industry groups covering the market sectors of 18 countries over the period 1970-2007 drawn from the EU KLEMS dataset. In all countries resources have been shifting away from industries with high TFP growth towards industries with low TFP growth. Nevertheless structural change has favoured TFP growth in most countries. Errors in measuring capital or in measuring the elasticity of output with respect to capital are unlikely to substantially reduce the role of TFP in explaining growth. The article concludes that the mystery of TFP is likely to remain as long as measurement error persists.

Item Type: Article
Official URL:
Additional Information: © 2016 The Authors
Divisions: Centre for Macroeconomics
Subjects: H Social Sciences > HB Economic Theory
Date Deposited: 28 Sep 2020 15:03
Last Modified: 28 Sep 2020 23:36

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