New Economics Papers
on Efficiency and Productivity
Issue of 2007‒01‒28
ten papers chosen by

  1. The cost efficiency of German banks : a comparison of SFA and DEA By Fiorentino, Elisabetta; Karmann, Alexander; Koetter, Michael
  2. Efficiency of Construction Firms in Vietnam By Nguyen, Khac Minh; Giang, Thanh Long
  3. The Productivity Paradox and the New Economy: The Spanish Case By Jesús Rodríguez López; Diego Martínez López; José Luis Torres Chacón
  4. The impact of innovation activities on productivity and firm growth: evidence from Brazil By Goedhuys, Micheline
  5. Efficiency Performance of Hospitals and Medical Centers in Vietnam By Nguyen, Khac Minh; Giang, Thanh Long
  6. Circulatory Disease in the NHS: Measuring Trends in Hospital Costs and Output By Adriana Castelli; Peter C Smith
  7. Productivity, external balance and exchange rates: evidence on the transmission mechanism among G7 countries By Giancarlo Corsetti; Luca Dedola; Sylvain Leduc
  8. Productivity Effects of FDI Inflows: A Literature Review By Hugo Rojas-Romagosa
  9. The Sources of Long-run Growth in Spain 1850-2000 By Leandro Prados de la Escosura; Joan R. Roses
  10. Do Auctions select Efficient Firms? By Maarten C.W. Janssen; Vladimir A. Karamychev

  1. By: Fiorentino, Elisabetta; Karmann, Alexander; Koetter, Michael
    Abstract: We investigate the consistency of efficiency scores derived with two competing frontier methods in the financial economics literature: Stochastic Frontier and Data Envelopment Analysis. We sample 34,192 observations for all German universal banks and analyze whether efficiency measures yield consistent results according to five criteria between 1993 and 2004: levels, rankings, identification of extreme performers, stability over time and correlation to standard accounting-based measures of performance. We find that non-parametric methods are particularly sensitive to measurement error and outliers. Furthermore, our results show that accounting for systematic differences among commercial, cooperative and savings banks is important to avoid misinterpretation about the status of efficiency of the total banking sector. Finally, despite ongoing fundamental changes in Europe’s largest banking system, efficiency rank stability is very high in the short run. However, we also find that annually estimated efficiency scores are markedly less stable over a period of twelve years, in particular for parametric methods. Thus, the implicit assumption of serial independence of bank production in most methods has an important influence on obtained efficiency rankings.
    Keywords: Cost Efficiency, Banks, Stochastic Frontier Approach, Data Envelopment Analysis
    JEL: D24 G21 L25
    Date: 2006
  2. By: Nguyen, Khac Minh; Giang, Thanh Long
    Abstract: This paper uses both parametric and non-parametric approaches to estimate technical efficiency for 2,298 construction firms in Vietnam in the database of the 2002 Economic Census for Enterprises by the General Statistics Office of Vietnam (GSO). It is found that results from both approaches are consistent, and they could help explain the performance efficiency of these firms. Estimates from the non-parametric approach (data envelopment analysis [DEA] model) and the parametric approach (stochastic frontier production function [SFPF] model) indicate that the average pure technical efficiency of these firms was about 60 percent (58.6% and 57.8% for DEA and SFPF, respectively). Models to test the factors influencing efficiency scores in both approaches show relatively similar results that state firms were more efficient than non-state ones, and location in Hanoi and Ho Chi Minh city did have impacts on efficiency scores. However, exploration of the net capital-labor ratio variable show that it did not influence efficiency scores in the DEA model, while it had clear influence in the SFPF model.
    Keywords: construction firms; data envelopment analysis (DEA); stochastic frontier production function (SFPF); Tobit regression; Vietnam
    JEL: C14 L74
    Date: 2005–01
  3. By: Jesús Rodríguez López (Department of Economics, Universidad Pablo de Olavide); Diego Martínez López (Centro de Estudios Andaluces y Department of Economics, Universidad Pablo de Olavide); José Luis Torres Chacón (Departamento de Teoría e Historia Económica, Universidad de Málaga)
    Abstract: This paper studies the impact of the information and communication technologies (ICT) on economic growth in Spain using a dynamic general equilibrium approach. Contrary to previous works, we use a production function with six different capital inputs, three of them corresponding to ICT assets. Calibration of the model suggests that the contribution of ICT to Spanish productivity growth is very relevant, whereas the contribution of non-ICT capital has been even negative. Additionally, over the sample period 1995-2002, we find a negative TFP and productivity growth. These results together aim at the hypothesis that the Spanish economy could be placed within the productivity paradox.
    Keywords: New economy, information and communication technologies, technological change, productivity paradox.
    JEL: E22 O30 O40
    Date: 2007–01
  4. By: Goedhuys, Micheline (UNU-MERIT and University of Antwerpen)
    Abstract: Using micro data from Brazilian manufacturing firms, this paper investigates the impact of a wide set of innovation activities on firms' total factor productivity (TFP) and its subsequent effect on firm growth, measured by sales. Controlling for size and age of the firms, productivity levels and productivity growth of firms over time are found to be key drivers of firm size adjustments. The activities leading to higher productivity levels are organizational change, cooperation with clients, human capital development, ICT usage, product innovation and learning by exporting, with an R&D effect only in the long run. Though the intensity with which firms engage in these innovation activities is sector dependent, innovation activities are in all sectors important for explaining sales growth differences, also in the more traditional sectors in which Brazilian firms have a competitive advantage.
    Keywords: Technological Change, Research and Development, Innovation, Productivity, Manufacturing Industry, Total Factor Productivity, Brazil
    JEL: O12 D24
    Date: 2007
  5. By: Nguyen, Khac Minh; Giang, Thanh Long
    Abstract: The purpose of this paper is to analyze the efficiency performance of the hospitals and medical centers in Vietnam by using a non-parametric approach, namely the data envelopment analysis (DEA) model. The data from the Economic Census for Enterprises by the General Statistics Office of Vietnam (GSO) consists of 44 observations, which include 17 hospitals and 27 medical centers in different provinces and cities in 2002. The results indicate that the average scale efficiency of the hospitals was 77.4 percent, while that of the medical centers was 58.7 percent. Further, hospitals were clearly more efficient than medical centers due to some possible factors. Locations in Hanoi and Ho Chi Minh city had no influence on either overall technical efficiency or scale efficiency. Despite differences in the results of testing the impact of net capital-labor ratio on efficiency for hospitals and medical centers, these organizations appear to operate in labor-intensive ways.
    Keywords: data envelopment analysis (DEA); hospital efficiency; Tobit regression; Vietnam
    JEL: C14 I19
    Date: 2004–11
  6. By: Adriana Castelli (Centre for Health Economics, University of York); Peter C Smith (Centre for Health Economics, University of York)
    Abstract: Following the publication of the Atkinson Review of the measurement of government outputs in the National Accounts, there has been great interest in measuring the productivity growth of the National Health Service. Such macro measures of productivity are important when deciding how much public money to devote to the NHS, and in holding the NHS to account. However, it is also important to gain an understanding of the productivity of individual programmes of care, so as to ensure that resources are allocated efficiently within the NHS. Hitherto, such information has not been available. This report is an exploratory study of the feasibility and usefulness of developing measures of growth in outputs, costs and productivity of a single programme of care within the NHS: hospital treatment of circulatory diseases.
    Date: 2006–12
  7. By: Giancarlo Corsetti; Luca Dedola; Sylvain Leduc
    Abstract: This paper investigates the international transmission of productivity shocks in a sample of five G7 countries. For each country, using long-run restrictions, we identify shocks that increase permanently domestic labor productivity in manufacturing (our measure of tradables) relative to an aggregate of other industrial countries including the rest of the G7. We find that, consistent with standard theory, these shocks raise relative consumption, deteriorate net exports, and raise the relative price of nontradables - in full accord with the Harrod-Balassa-Samuelson hypothesis. Moreover, the deterioration of the external account is fairly persistent, especially for the US. The response of the real exchange rate and (our proxy for) the terms of trade di¤ers across countries: while both relative prices depreciate in Italy and the UK (smaller and more open economies), they appreciate in the US and Japan (the largest and least open economies in our sample); results are however inconclusive for Germany. These findings question a common view in the literature, that a country's terms of trade fall when its output grows, thus providing a mechanism to contain di¤erences in national wealth when productivity levels do not converge. They enhance our understanding of important episodes such as the strong real appreciation of the dollar as the US productivity growth accelerated in the second half of the 1990s. They also provide an empirical contribution to the current debate on the adjustment of the US current account position. Contrary to widespread presumptions, productivity growthin the US tradable sector does not necessarily improve the US trade deficit, nor deteriorate the US terms of trade, at least in the short and medium run.
    Keywords: International transmission mechanism, net exports, terms of trade, real exchange rates, VAR, long-run restrictions, US current account
    JEL: F32 F41 F42
    Date: 2006
  8. By: Hugo Rojas-Romagosa
    Abstract: Foreign Direct Investment (FDI) flows have increased substantially in the past two decades. These developments have motivated the appearance of a large number of empirical papers that test the expected benefits that FDI inflows are assumed to bring to the host countries.We survey the recent theoretical and empirical literature, but restrict our attention to the productivity changes that are induced by increased FDI inflows. We review both the aggregate productivity effects, as well as the spillover effects of FDI on local firms.
    Keywords: FDI; productivity growth
    JEL: F23 O33 O47
    Date: 2006–12
  9. By: Leandro Prados de la Escosura; Joan R. Roses
    Abstract: Between 1850 and 2000, Spain’s real income increased by about 40-fold, at an average rate of 2.5 percent. The sources of this long-run growth are investigated using Jorgenson-type growth accounting analysis. We find that growth upsurges are closely related to increases in TFP. Spanish economic growth went through three successive phases. The century before 1950 was characterized by slow growth driven by factor accumulation. TFP improvements pushed up explosive growth during the Golden Age and mitigated the deceleration during the transition to democracy years (1975-86). Since the accession to the European Union Spain has experienced a dramatic productivity slowdown.
    Date: 2007–01
  10. By: Maarten C.W. Janssen (Erasmus Universiteit Rotterdam); Vladimir A. Karamychev (Erasmus Universiteit Rotterdam)
    Keywords: Auctions; cost-efficiency; aftermarkets
    JEL: D43 L11 L13
    Date: 2007–01–04

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