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Total Factor Productivity Growth and Technical Change in a Profit Function Framework

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Abstract

This paper develops a framework for measuring and decomposing TFP changes, within the parametric approach, by using directly the estimated parameters of a profit function. Two alternative relationships are derived for measuring and decomposing TFP changes via a profit function based on two alternative definitions of the rate of technical change, i.e., input- and output-based. Initially a long-run equilibrium framework is assumed and then the analysis is extended to the case of temporary equilibrium. The latter framework is applied to US agriculture by estimating a translog profit function and analyzing TFP changes during the period 1948–1994.

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Authors and Affiliations

  1. Department of Economics, University of Crete, Greece

    Giannis Karagiannis

  2. Department of Economics, University of Athens, Greece

    George J. Mergos

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  1. Giannis Karagiannis
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  2. George J. Mergos
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Karagiannis, G., Mergos, G.J. Total Factor Productivity Growth and Technical Change in a Profit Function Framework. Journal of Productivity Analysis 14, 31–51 (2000). https://doi.org/10.1023/A:1007891811797

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