On the Measurement of TFP: A Latent Variable Approach
Rodrigo Fuentes; Marco Morales.
Macroeconomic Dynamics, 15(2): 145 - 159, 2011.
Despite the important role that total factor productivity (TFP) has played in the growth literature, few attempts have been made to change the methodology to estimate it. This paper proposes a methodology based on a state-space model to estimate TFP and its determinants. With this methodology, it is possible to reduce the measurement of our ignorance. As a by-product, this estimate yields the capital share in output and the long-term growth rate. When applied to Chile, the estimation shows a capital share around 0.5 and long-term growth of TFP around 1%. Capital accumulation tends to explain the growth rate in the fast growth periods under the econometric estimation more than the traditional growth accounting methodology.
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Etiquetas: Chile, crecimiento económico, TFP