Uncertainty and the measurement of productivity
- Cite this article as:
- Appelbaum, E. J Prod Anal (1991) 2: 157. doi:10.1007/BF00159729
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The purpose of this paper is to provide an empirically implementable framework for the analysis of the effects of uncertainty on firm behavior. In particular, the paper provides a model which can be used to calculate productivity growth for firms facing uncertainty and to decompose the growth in total factor productivity into its various components. It can also be used to identify the contributions of uncertainty and risk aversion.
Applying the model to the U.S. textile industry, we find that price uncertainty had a small effect on productivity growth.