New Economics Papers
on Efficiency and Productivity
Issue of 2005‒12‒01
twenty-one papers chosen by

  2. Computing the True Spread By Ralf Martin
  3. Knowledge and Productivity in the World's Largest Manufacturing Corporations Level:Panel Data analysis on Compustat and Patent data By Lionel Nesta
  4. EFFICIENCY AND PRODUCTIVITY OF NORWEGIAN TAX OFFICES By Førsund, Finn R.; Kittelsen, Sverre A.C; Lindseth, Frode
  5. Farm Productivity and Market Structure. Evidence from Cotton Reforms in Zambia By Irene Brambilla; Guido Porto
  7. Nonparametric Productivity Analysis By Wolfgang Härdle; Seok-Oh Jeong
  8. Stock Prices, Total Factor Productivity and Economic Fluctuations; Some Further Evidence from Japanese and U.S. Sectoral Data By Paul Beaudry; Franck Portier
  9. Cod Today and None Tomorrow: The Economic Value of a Marine Reserve By Yusuf Tashrifov
  10. Efficiency and Foreign Ownership in Banking: An International Comparison By Adnan Kasman; Saadet Kýrbaþ Kasman; Oscar Carvallo
  11. Financial Crises and Total Factor Productivity: The Mexican Case By Felipe Meza; Erwan Quintin
  12. Technology Adoption, Learning by Doing, and Productivity: A Study from Steel Refining Furnaces By Hiroshi Ohashi; Tsuyoshi Nakamura
  13. Productivity and the Post-1990 U.S. Economy By Ellen McGrattan; Edward Prescott
  14. Multinationals and US Productivity Leadership: Evidence from Great Britain By Chiara Criscuolo; Ralf Martin
  15. Productivity Growth and the Role of ICT in the United Kingdom: An Industry View, 1970-2000 By Nicholas Oulton; Sylaja Srinivasan
  16. Efficiency potential and efficiency variation in Norwegian lower secondary schools By Lars-Erik Borge; Linn Renée Naper, Department of Economics, Norwegian University of Science and Technology
  17. The Impact of Training on Productivity and Wages: Evidence from British Panel Data By Lorraine Dearden; Howard Reed; John Van Reenen
  18. Can Environmental Regulations be Good for Business? an Assessment of the Porter Hypothesis By Ambec, Stefan; Barla, Philippe
  19. Do domestic firms benefit from the presence of MNEs? The case of the Italian manufacturing sector By Filippo Reganati; Edgardo Sica
  20. Productivity measurement and monetary policymaking during the 1990s By Richard G. Anderson; Kevin L. Kliesen
  21. The Industry Origins of Japanese Economic Growth By Dale W. Jorgenson; Koji Nomura

  1. By: Danilo Camargo Igliori
    Abstract: The determinants of technical efficiency in agriculture and cattle ranching are closely related with the debate involving the conservation-development trade-off in the Brazilian Amazon. Concerned with balancing development and environmental conservation, policy makers and academics have emphasized the importance of choosing ways of selecting areas where land use restrictions would be established. In order to understand the relationship between spatial patterns of deforestation and the associated distribution and characteristics of economic activity, issues regarding technical efficiency are clearly important. This paper aims to identify the socio-economic and environmental determinants of technical efficiency in agriculture and cattle ranching in the Brazilian Amazon emphasizing their relationship with spatial processes of deforestation and development. The study is structured in two parts. The first part is concerned with measuring technical efficiency for agriculture and cattle ranching in each geographical unit focusing on the production relationship between inputs and outputs. The second one focuses on the variation in the efficiency measure explained by exogenous factors and includes the spatial analysis. We adopt the model proposed by Battese and Coelli (1995) where the production function and the exogenous effects influencing technical efficiency are estimated simultaneously.
    JEL: Q10 Q24 R12
    Date: 2005
  2. By: Ralf Martin
    Abstract: How much of the observed labour productivity spread is real? This paper proposes a novel frameworkto calculate productivity differences between plants accounting for imperfect competition, variationsin output prices across plants, endogeneity of factor inputs and measurement error in labour inputs.For UK manufacturing as a whole I find that on average 59 percent of the labour productivity spreadis explained by a combination of technical efficiency variations and differences in consumervaluations. Measurement error accounts on average for 9 percent of labour productivity spreads. Thepaper argues that standard TFP calculations lead to a systematic under-estimation of welfare relevantdifferences across businesses.
    Keywords: Productivity Measurement, Imperfect Competition, Productivity Spread
    JEL: C81 D24 L11 L25
    Date: 2005–05
  3. By: Lionel Nesta (Observatoire Français des Conjonctures Économiques)
    Abstract: This paper examines the relationship between the characteristics of firm knowledge in terms of capital, diversity and relatedness, and productivity. Panel data regression models suggest that unlike knowledge diversity, knowledge capital and knowledge relatedness explain a substantial share of the variance of firm productivity. Activities based on a related set of technological knowledge are more productive than those based on unrelated knowledge because the cost of co-ordinating productive activities decreases as the knowledge used in these activities is being integrated efficiently. The impact of knowledge relatedness on productivity in high-technology sectors is higher than in other sectors.
    Keywords: productivity; intangible assets; market value; panel data
    JEL: G12 O31 L65
    Date: 2005
  4. By: Førsund, Finn R. (Dept. of Economics, University of Oslo); Kittelsen, Sverre A.C (Ragnar Frisch Centre for Economic Research); Lindseth, Frode (The Norwegian Directorate of Taxes)
    Abstract: The performance of local tax offices of Norway is studied over a three year period applying Data Envelopment Efficiency analysis and a Malmquist productivity index. The estimates are biascorrected using a bootstrap approach recently developed for DEA models. The results show that bias correction and the construction of confidence intervals give a quite different picture than without bootstrapping. A set of best practice offices is identified for future work on finding explanations for good performance. The productivity development of individual offices is classified into the four categories efficient cost increase, efficient cost savings, inefficient cost savings and inefficient cost increase
    Keywords: Tax office; productivity; efficiency; scale efficiency; DEA; bootstrap
    JEL: C60 D24 L89
    Date: 2005–11–14
  5. By: Irene Brambilla; Guido Porto
    Abstract: This paper investigates the impacts of cotton marketing reforms on farm productivity, a key element for poverty alleviation, in rural Zambia. The reforms comprised the elimination of the Zambian cotton marketing board that was in place since 1977. Following liberalization, the sector adopted an outgrower scheme, whereby firms provided extension services to farmers and sold inputs on loans that were repaid at the time of harvest. There are two distinctive phases of the reforms: a failure of the outgrower scheme, and a subsequent period of success of the scheme. Our findings indicate that the reforms led to interesting dynamics in cotton farming. During the phase of failure, farmers were pushed back into subsistence and productivity in cotton declined. With the improvement of the outgrower scheme of later years, farmers devoted larger shares of land to cash crops, and farm productivity significantly increased.
    JEL: O12 O13 Q12
    Date: 2005–11
  6. By: Luiz Chabalgoity; Emerson Marinho; Mauricio Benegas; Paulo de M. Jorge Neto
    Abstract: This paper analyzes the impact after the entry and the increase in the capital participation of foreign banks in the Brazilian financial institutions. In this sense, taking into account three sub-sets of banks by controlling capital origin - domestic privates, foreigner and public-, an analysis was carried out to find out whether there were technical efficiency and productivity gains in Brazil' banking industry. Therefore, a production frontier was built using the Data Envelopment Analysis (DEA) which allows for the calculation of technical efficiency. Next, performing one of these measures, Malmquist's total productivity index is calculated. The results showed that the technical efficiency of the Brazilian banking industry has not evolved as must as it has been expected, although a total productivity increase has actually occurred, arising only from the technological progress. The foreign banks earned the most productivity gains followed by the domestic private banks. The technological leadership (test), proposed by Marinho and Benegas (2002), showed that the domestic private banks determined the industry's technological pattern.
    JEL: G21 G28 O33
    Date: 2005
  7. By: Wolfgang Härdle; Seok-Oh Jeong
    Abstract: How can we measure and compare the relative performance of production units? If input and output variables are one dimensional, then the simplest way is to compute efficiency by calculating and comparing the ratio of output and input for each production unit. This idea is inappropriate though, when multiple inputs or multiple outputs are observed. Consider a bank, for example, with three branches A, B, and C. The branches take the number of staff as the input, and measures outputs such as the number of transactions on personal and business accounts. Assume that the following statistics are observed: Branch A: 60000 personal transactions, 50000 business transactions, 25 people on staff, Branch B: 50000 personal transactions, 25000 business transactions, 15 people on staff, Branch C: 45000 personal transactions, 15000 business transactions, 10 people on staff. We observe that Branch C performed best in terms of personal transactions per staff, whereas Branch A has the highest ratio of business transactions per staff. By contrast Branch B performed better than Branch A in terms of personal transactions per staff, and better than Branch C in terms of business transactions per staff. How can we compare these business units in a fair way? Moreover, can we possibly create a virtual branch that reflects the input/output mechanism and thus creates a scale for the real branches? Productivity analysis provides a systematic approach to these problems. We review the basic concepts of productivity analysis and two popular methods DEA and FDH, which are given in Sections 12.1 and 12.2, respectively. Sections 12.3 and 12.4 contain illustrative examples with real data.
    Keywords: relative performance, production units, productivity analysis, Data Envelopment Analysis, DEA, Free Disposal Hull, DFH, insurance agencies, manufacturing industry
    JEL: C14 D20
    Date: 2005–03
  8. By: Paul Beaudry; Franck Portier (Economics Universite de Toulouse)
    Keywords: Stock Prices - Total Factor Productivity
    JEL: E3
    Date: 2005
  9. By: Yusuf Tashrifov
    Abstract: This study examines the effects of market reform on the agriculture sector of Tajikistan. It investigates the level and determinants of technical efficiency for a sample of cotton growing regions in Tajikistan. Using unbalanced panel data of 11 years covering the transition period 1992-2002, 34 cotton-producing regions are analysed with a translog stochastic production frontier, including a model for regional-specific technical inefficiencies. The output elasticities, marginal productivities of inputs, returns to scale, and indices of convergence are also examined. They reveal that the technical inefficiency effects are found to be highly significant in indicating the ranges and variation in regional outputs. The results show that market reforms had a significant positive impact on technical efficiency of cotton production, which, in turn, has a substantial contribution to the process of economic development of Tajikistan.
    JEL: D20 Q16 Q13 Q10
    Date: 2005
  10. By: Adnan Kasman (Department of Economics, Faculty of Business, Dokuz Eylül University); Saadet Kýrbaþ Kasman (Department of Economics, Faculty of Business, Dokuz Eylül University); Oscar Carvallo (Venezuelan Banking Association)
    Abstract: This paper estimates cost and profit efficiency for Latin American and the Caribbean banking sectors. This study also conducts a comparative analysis of the performance of foreign and domestic banks operating in these counties. Using a model proposed by Battese and Coelli (1995), a common cost and profit frontiers with country-specific environmental variables have been estimated for a panel of 427 banking firms from sixteen countries. The empirical analysis reveals the importance of the environmental variables in explaining the efficiency differences among countries. The results show that profit efficiency levels are well below those corresponding to cost efficiency, implying that the most important inefficiency is on the revenue side. The results further indicate that on average foreign banks are more efficient than domestic banks.
    Keywords: Banking; Efficiency, foreign ownership
    JEL: G21 G28
  11. By: Felipe Meza; Erwan Quintin
    Keywords: Financial crises, total factor productivity, output fluctuations
    JEL: F41
    Date: 2005
  12. By: Hiroshi Ohashi; Tsuyoshi Nakamura (Department of Economics University of Tokyo)
    Keywords: Learning by Doing; vintage capital; technology adoption; TFP; endogeneity; sample selection
    JEL: D24 L61 O14
    Date: 2005
  13. By: Ellen McGrattan (Research Federal Reserve Bank of Minneapolis); Edward Prescott
    Keywords: Productivity & Intangibles
    Date: 2005
  14. By: Chiara Criscuolo; Ralf Martin
    Abstract: We study the productivity of US owned plants in the UK. Using a new dataset that identifies foreignand domestic MNEs, we find that UK MNEs are less productive than US affiliates, but as productiveas non US foreign affiliates. We investigate the source of the US and MNE advantage. We findevidence confirming that the MNE advantage is driven by sharing superior firm level assets acrossplants and by cherry picking the better plants in a country. The additional superiority of US firmsseems entirely driven by their particular ability to takeover the best British plants. Thirdly, the studyfeatures a novel approach to TFP calculation.
    Keywords: Multinational Firms, Productivity, Foreign Ownership, US leadership, Double Fixed-Effects
    JEL: F23 L60
    Date: 2005–01
  15. By: Nicholas Oulton; Sylaja Srinivasan
    Abstract: We use a new industry-level dataset to quantify the role of ICT in explaining productivitygrowth in the UK, 1970-2000. The dataset is for 34 industries covering the whole economy(31 in the market sector). Using growth accounting, we find that ICT capital played anincreasingly important, and in the 1990s the dominant, role in accounting for labourproductivity growth in the market sector. Econometric evidence also supports an importantrole for ICT. We also find econometric evidence that a boom in complementary investment inthe 1990s could have led to a decline in the conventional measure of TFP growth.
    Keywords: productivity, TFP, ICT
    JEL: O47 O52 D24
    Date: 2005–03
  16. By: Lars-Erik Borge (Department of Economics, Norwegian University of Science and Technology); Linn Renée Naper, Department of Economics, Norwegian University of Science and Technology (Centre for Economic Research and Department of Economics, Norwegian University of Science and Technology)
    Abstract: The paper performs an efficiency analysis of the lower secondary school sector in Norway. The efficiency potential is calculated to 14 percent based on a DEA analysis with grades in core subjects (adjusted for student characteristics and family background) as outputs. The analysis of the determinants of efficiency indicates that a high level of municipal revenue, a high degree of party fragmentation, and a high share of socialists in the local council are associated with low educational efficiency. The negative effects of the share of socialists and party fragmentation seem to reflect both higher resource use and lower student performance.
    Keywords: educational efficiency; DEA analysis; determinants of efficiency; political and budgetary institutions
    JEL: I21
    Date: 2005–11–17
  17. By: Lorraine Dearden; Howard Reed; John Van Reenen
    Abstract: It is standard in the literature on training to use wages as a sufficient statistic for productivity. But there aremany reasons why wages and productivity may diverge. This paper is part of a smaller literature on the effectsof work-related training on direct measures of productivity. We construct a panel of British industries between1983 and 1996 containing training, productivity and wages. Using a variety of econometric estimationtechniques (including system GMM) we find that training is associated with significantly higher productivity.Raising the proportion of workers trained in an industry by one percentage point (say from the average of 10%to 11%) is associated with an increase in value added per worker of about 0.6% and an increase in wages ofabout 0.3%. Furthermore, we find that the magnitude of the impact of training on wages is only half as large asthe impact of training on productivity, implying that the existing literature has underestimated the importance oftraining. We also show evidence using complementary datasets (e.g. from individuals) that is suggestive ofexternalities of training and imperfect competition.
    Keywords: Productivity, training, wages, panel data
    JEL: J31 C23 D24
    Date: 2005–02
  18. By: Ambec, Stefan; Barla, Philippe
    Abstract: The Porter hypothesis asserts polluting firms can benefit from environmental policies, arguing that well-designed environmental regulations stimulate innovation, which by increasing either productivity or product value, leads to private benefits. As a consequence, environmental regulations would benefit both society and regulated firms. This point of view has found a receptive audience among policy makers and the popular press but has been severely criticized by economists. In this paper, we present some of the arguments in this debate and review the empirical evidence available so far in the economic literature.
    Keywords: Porter Hypothesis, Environmental Regulations, Competitiveness
    JEL: Q50 Q52 Q55
    Date: 2005
  19. By: Filippo Reganati; Edgardo Sica
    Abstract: According to the main economic literature, foreign direct investment (FDI) from Multinational Enterprises (MNEs) can generate positive externalities to host countries, increasing the domestic firms’ productivity. Recently, the attention of researchers has moved from the analysis of ''horizontal'' spillovers – i.e. those benefits to local enterprises at an intraindustrial level - towards the investigation of ''vertical'' spillovers phenomenon – i.e. the diffusion of positive effects on domestic economies at an inter-industry level. In this paper we investigate the presence of both these two kinds of spillovers using a firm-level panel data of domestic and foreign firms in the Italian manufacturing sector. The results show the lack of ''horizontal'' spillovers and, at the same time, the presence of ''vertical'' ones.
    Keywords: FDI; MNEs; Spillovers; Italian manufacturing sector
    Date: 2005–11
  20. By: Richard G. Anderson; Kevin L. Kliesen
    Abstract: The acceleration of productivity growth during the latter half of the 1990s was both the defining economic event of the decade and a major topic of debate among Federal Reserve policymakers. A key aspect of the debate was the conflict between incoming aggregate data, which initially suggested little productivity gain, and anecdotal firm-level evidence which hinted at an acceleration. Some FOMC members feared an overheating economy and higher inflation; others, including the Chairman, argued that revolutionary increases in productivity were occurring and the Committee should not prematurely forgo significant future gains in real income by tightening policy. We review the difficulty of measuring productivity during periods of rapid quality change, the large magnitude of subsequent data revisions during the 1990s, and, from FOMC transcripts, the contemporary monetary policy debate within the FOMC as the decade*s data evolved.
    Keywords: Monetary policy ; Production (Economic theory)
    Date: 2005
  21. By: Dale W. Jorgenson; Koji Nomura
    Abstract: This paper presents new data on the sources of growth for the Japanese economy over the period 1960- 2000. The principal innovation is the incorporation of detailed information for individual industries, including those involved in the production of computers, communications equipment, and electronic components as information technology equipment. We show that economic growth is dominated by investments and productivity growth in information technology, both for individual industries and the economy as a whole. We also show that the revival of total factor productivity growth accounts for the modest resurgence of the Japanese economy since 1995.
    JEL: C82 D24 E23
    Date: 2005–11

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