Linked-Cone Profit Ratio Estimates of U.S. Total Factor Productivity Growth, Using DEA/AR Methods

  • Russell G. Thompson
  • E. A. Waltz
  • P. S. Dharmapala
  • R. M. Thrall
Part of the Advances in Computational Economics book series (AICE, volume 6)


Solow’s total factor productivity (TFP) equation is revisit ed in a Data Envelopment Analysis (DEA) context. Linked-cone (LC) profit ratios were used to measure the capital share and, in turn, TFP growth for the United States. Market imperfections are allowed for, and the role of slacks is evaluated. For the years 1980, 1985, and 1990, DEA methods were applied to Organization for Economic Cooperation and Development (OECD) data for ten leading industrialized nations, namely, Canada, United States (U.S.), Japan, Australia, Belgium, France, Germany, Italy, Sweden and United Kingdom. For the U.S., the LC estimates of TFP growth were noticeably greater than the TFP estimates using the standard growth accounting approach; and similarly, the LC estimates of TFP growth were greater than the TFP estimates using Malmquist indexes. Unfortunately, ignoring slacks in Malmquist indexes may well bias the efficiency measures and, in turn, the TFP growth estimates.


Total Factor Productivity Total Factor Productivity Growth Malmquist Index Capital Share Total Factor Productivity Growth Rate 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media Dordrecht 1997

Authors and Affiliations

  • Russell G. Thompson
    • 1
  • E. A. Waltz
    • 2
  • P. S. Dharmapala
    • 3
  • R. M. Thrall
    • 4
  1. 1.University of HoustonUSA
  2. 2.University of Texas School of Public HealthHoustonUSA
  3. 3.Sultan Qaboos UniversityOmanUSA
  4. 4.Rice UniversityComputations were made by the OPCON CorporationThe WoodlandsUSA

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