On the relation between gross output and value added production functions (and why it matters)
The estimation of production functions remains ubiquitous in economics, both at the firm and aggregate level. While some focus on gross output production functions (GO-PF), others use value added production functions (VA-PF). Because value added is constructed as gross output minus intermediary inputs (properly deflated), VA-PFs are but a transformation of the GO-PF. Therefore, regardless of which is the starting point of researchers, one function is implicitly imposing restrictions on the other. Which are these restrictions? Are they reasonable? Does it matter (e.g. for TFP measurement)? I address these questions.
Date: 23 January 2020, 15:00 (Thursday, 1st week, Hilary 2020)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar room C
Speaker: Dr Luis Valenzuela (INET Oxford Postdoctoral Research Officer, Employment Equity & Growth Programme)
Organising department: Institute for New Economic Thinking
Organiser: Susan Mousley (INET Oxford Admin Team)
Organiser contact email address: info@inet.ox.ac.uk
Part of: INET Oxford Researcher Seminars
Booking required?: Required
Booking email: info@inet.ox.ac.uk
Audience: Members of the University only
Editor: Susan Mousley