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on Efficiency and Productivity |
| By: | Anna D. Mata; Héctor M. Núñez |
| Abstract: | This study examines the energy efficiency and environmental performance of Mexico's manufacturing sector across regions. We employ a Data Envelopment Analysis model that optimizes the weighted output-input ratio for each decision-making unit. Specifically, a non-radial directional distance function model is used to account for both desirable outputs and undesirable outputs, represented by greenhouse gas emissions. The findings show that including undesirable outputs reduces the estimated economic efficiency. Over the analysis period, the production frontier shifted only modestly. Regionally, northern states perform best, while southern states lag behind, revealing considerable potential for national energy and emission savings. |
| Keywords: | Undesirable output;Energy efficiency improvements;GHG emission performance;Directional distance function |
| JEL: | C61 D24 Q43 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:bdm:wpaper:2025-10 |
| By: | Yoshiki Ando; James Bessen; Xiupeng Wang |
| Abstract: | R&D investment has grown robustly, yet aggregate productivity growth has stagnated. Is this because “ideas are getting harder to find”? This paper uses micro-data from the US Census Bureau to explore the relationship between R&D and productivity in the manufacturing sector from 1976 to 2018. We find that both the elasticity of output (TFP) with respect to R&D and the marginal returns to R&D have risen sharply. Exploring factors affecting returns, we conclude that R&D obsolescence rates must have risen. Using a novel estimation approach, we find consistent evidence of sharply rising technological rivalry. These findings suggest that R&D has become more effective at finding productivity-enhancing ideas but these ideas may also render rivals’ technologies obsolete, making innovations more transient. |
| Keywords: | R&D, innovation, productivity, obsolescence |
| JEL: | O32 O33 L10 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-29 |
| By: | de la Fonteijne, Marcel R. |
| Abstract: | For several decades, it has been recognized that the implementation of capital and labor augmented technical progress, as is done to date, leads to a theoretical paradox: either the CES production function has to be Cobb-Douglas or there exists labor augmented technical progress only. This so-called “Cobb-Douglas or labor augmented technical progress only paradox” continues to appear in economic models despite its inconsistency. In this paper, we reject the conventional approach, i.e., all kind of neutral and non-neutral capital and labor augmented technical progress and propose a revised implementation of technical progress that resolves the paradox. Economic growth is modeled as partly exogenous, driven by technical change, and partly endogenous, driven by capital accumulation. We provide formulas to translate total factor productivity (TFP) into economic growth to show the connection, thereby clarifying the link between TFP and output dynamics. This approach offers a new perspective on the Solow model and opens alternative paths for investigating endogenous growth mechanisms. |
| Keywords: | Capital and Labor Augmented Technical Progress; Growth Model; Maximum Profit Condition; Production Function; General Technological Progress; Capital-Labor-mix; Elasticity of Substitution; DSGE; Total Factor Productivity; Solow model; Hicks; Harrod |
| JEL: | E00 E20 E23 E24 |
| Date: | 2025–06–24 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:125134 |
| By: | Grégory Donnat (Université Côte d'Azur, CNRS, GREDEG, France); Maxime Menuet (Université Côte d'Azur, CNRS, GREDEG, France); Alexandru Minea (LEO, University of Orleans, France; Carleton University, Canada); Patrick Villieu (LEO, University of Orleans, France) |
| Abstract: | What explains the persistent slowdown in total factor productivity (TFP) growth across advanced economies? This paper identifies rising public debt as a key structural driver. Using a panel of 25 OECD countries from 1980 to 2019, we provide robust empirical evidence that sustained debt accumulation has significantly contributed to the TFP deceleration, consistent with a hysteresis mechanism whereby temporary fiscal shocks leave long-lasting scars on productivity levels. To account for this evidence, we develop a theoretical model grounded in a stochastic endogenous growth setup. In the deterministic equilibrium, higher public debt ratios reduce TFP growth via a long-run crowding-out effect. In the stochastic setting, we uncover a new procyclical amplification mechanism, whereby debt adjustments amplify fluctuations in TFP. Our model reproduces the observed negative correlation between cyclical components of public debt and TFP without relying on persistent exogenous shocks, offering a novel perspective on the drivers of the productivity slowdown. |
| Keywords: | Total factor productivity, Endogenous growth, Public debt |
| JEL: | E62 H62 O41 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2025-26 |
| By: | Guanyu LU; Kenta TANAKA; Toshi H. ARIMURA |
| Abstract: | This study examines the impact of the Tokyo and Saitama regional emissions trading systems (ETSs) on the productivity of Japan’s manufacturing installations. Utilizing data from the Economic Census for Business Activity and the Census of Manufacture, we measure the total factor productivity (TFP) of both regulated and unregulated manufacturing installations. Subsequently, we estimate the extent to which the ETSs impact the TFP of regulated manufacturing installations. Our findings indicate that the TFP of regulated installations increases after the implementation of ETS compared to that of unregulated installations. Furthermore, the results of factor analysis suggest that investment trends in equipment differ between regulated and unregulated installations. These findings underscore the interaction between environmental regulations and installation productivity in Japan, contributing to policy discussions on effective climate change mitigation strategies. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25063 |
| By: | Bortolan, Leonardo; Dey, Atreya; Taschini, Luca |
| Abstract: | We establish the financial materiality of temperature variability by demonstrating its impact on US firms and investors. A long-short strategy that sorts firms based on exposure earns a market-adjusted alpha of 39 basis points per month. This variability metric is related to aggregate decreases in firm profitability, with asymmetric effects across industries. These outcomes are driven by reductions in consumer demand and labor productivity coupled with changes in media and investor attention. The geographically scalable statistical framework provides a reference for assessing the quantitative effects of climate-related physical risks, offering a metric for improving the disclosure of material climate risks. |
| Keywords: | corporate climate reporting; climate attention; temperature variability; stock returns; firm performance |
| JEL: | C21 C23 G12 G32 Q54 |
| Date: | 2024–12–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128521 |
| By: | Nobuya FUKUGAWA |
| Abstract: | This study investigates the impact of Technology Extension Services (TES) on the productivity of small and medium-sized enterprises (SMEs) in Japan, using an Endogenous Switching Regression model and firm-level panel data covering both the pre-pandemic (2016–2019) and pandemic (2020–2023) periods. Focusing on Kohsetsushi , Japan’s extensive network of public support institutes for SMEs, the analysis finds that TES adoption significantly improves firm productivity across both periods, highlighting its role as a locally embedded innovation intermediary. Firms with higher levels of intangible capital benefited more, with complementary effects particularly pronounced during the pandemic—suggesting that absorptive capacity became critical under crisis conditions. Selection estimates reveal that more productive firms were more likely to adopt TES, although some equally capable firms opted out—consistent with comparative advantage shaping self-selection patterns. Geographic proximity to service providers constrained TES access in stable periods but became less critical during the pandemic due to the expansion of digital service delivery. These findings underscore how firm capabilities, external shocks, and spatial access jointly influence the effectiveness of public technology support programs. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25064 |
| By: | John Chung |
| Abstract: | To what extent do domestic distortions influence the gains from trade? Using data from Chinese manufacturing surveys and U.S. census records, I document two novel stylized facts: (1) Larger producers in China exhibit lower revenue productivity, whereas larger producers in the U.S. exhibit higher revenue productivity. (2) Larger exporters in China exhibit lower export intensity, whereas larger exporters in the U.S. exhibit higher export intensity. A model of heterogeneous producers shows that only the U.S. patterns are consistent with an efficient allocation. To reconcile the observed patterns in China, I introduce producer- and destination-specific subsidies and estimate the model without imposing functional form assumptions on the joint distribution of productivity and subsidy rates. Accounting for distortions in China leads to substantially smaller estimated gains from trade. |
| JEL: | F14 F12 D61 O17 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-33 |
| By: | Ulrich Doraszelski; Lixiong Li |
| Abstract: | We advance the proxy variable approach to production function estimation. We show that the invertibility assumption at its heart is testable. We characterize what goes wrong if invertibility fails and what can still be done. We show that rethinking how the estimation procedure is implemented either eliminates or mitigates the bias that arises if invertibility fails. Furthermore, we show how a modification of the procedure ensures Neyman orthogonality, enhancing efficiency and robustness by rendering the asymptotic distribution of the GMM estimator in the second step of the estimation procedure invariant to estimation noise from the first step. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.13520 |
| By: | Bowman, Maria; Ferraro, Paul J.; Fuller, Kate Binzen; Gramig, Benjamin; Mosheim, Roberto; Njuki, Eric; Pratt, Bryan; Rejesus, Roderick; Rosenberg, Andrew |
| Abstract: | The use of soil health and conservation practices has the potential to benefit society and agricultural producers through improvement in soil health, water quality, agricultural productivity, and other ecosystem services. However, there are costs associated with implementing such practices, and the net benefit to the producer and to society depends on how the practice is implemented, the production system, weather, climate, soils, and other variables. In addition, the factors affecting a producer’s decision to implement soil health and conservation practices are complex. These factors include expectations about short- and long-run profitability, the risk and uncertainty associated with the practices, and behavioral factors such as producer willingness to take on risk, peer effects, and stewardship identity. This report provides conceptual framing and background on soil health management, producer decision making, and economic outcomes of soil health and conservation practices; documents trends in the adoption of key soil health and conservation practices on cropland; reviews key findings on the economic effects of soil health and conservation practices; and provides new results on the relationship between selected practices and the yields and costs at the field level and farm-level productivity and technical efficiency. |
| Keywords: | Crop Production/Industries, Farm Management, Institutional and Behavioral Economics, Land Economics/Use, Production Economics, Productivity Analysis, Research Research Methods/Statistical Methods, Resource/Energy Economics and Policy |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ags:uersrr:358985 |
| By: | Dylan Hogg; Hossein Jebeli |
| Abstract: | Assessing insolvency dynamics is essential for evaluating the financial health of non-financial corporations and mitigating macroeconomic and financial stability risks. This study leverages a newly created Statistics Canada dataset linking insolvency records with firm-level financial data to develop a robust framework for monitoring insolvency risk. We employ two complementary approaches: a univariate threshold method that establishes critical financial ratio benchmarks and a multivariate econometric model that accounts for interactions among financial indicators. These methods produce debt-at-risk measures that enhance risk assessment by combining simplicity with analytical depth. Finally, we apply these metrics to timely firm-level data, enabling continual monitoring of financial vulnerabilities. |
| Keywords: | Credit and credit aggregates; Econometric and statistical methods; Financial stability; Firm dynamics |
| JEL: | G33 L20 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:bca:bocadp:25-010 |
| By: | Tarsia, Romano |
| Abstract: | This paper provides novel firm-level estimates of the economic damages caused by temperature shocks to European firms. I rely on a panel data analysis to show wide heterogeneities in the impact of temperature shocks, which depend on firm characteristics. This paper reveals the importance of micro-level data to reduce the uncertainty in climate damages estimates, as the average relationship between temperature and economic outcomes masks firms’ different susceptibilities to weather shocks. These create both winners and losers, harming less productive and smaller firms, particularly those in warmer regions, while benefiting more productive ones. This paper highlights the distributional effects of climate change, and offers insights for targeted adaptation policies. |
| Keywords: | weather; climate change; firms; climate damages; economic performance |
| JEL: | D24 O13 O14 O52 Q51 Q54 R11 |
| Date: | 2024–11–21 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128533 |