1 MEASUREMENT PROBLEMS OF MEASUREMENT PROBLEMS OF TFP PERFORMANCE IN AN TFP PERFORMANCE IN AN UNSTABLE ECONOMY: UNSTABLE ECONOMY: ARGENTINA 1990-2004 ARGENTINA 1990-2004 “ “ A Case of the Tyranny of Methodology” A Case of the Tyranny of Methodology” ARIEL COREMBERG ARIEL COREMBERG ECLAC Buenos Aires ECLAC Buenos Aires CONICET/IDES CONICET/IDES [email protected][email protected][email protected]The 2008 World Congress on National Accounts and Economic Performance Measures for Nations May 12–17, 2008 Key Bridge Marriott (Arlington, VA—minutes from Washington D.C.)
46
Embed
1 MEASUREMENT PROBLEMS OF TFP PERFORMANCE IN AN UNSTABLE ECONOMY: ARGENTINA 1990-2004 “A Case of the Tyranny of Methodology” ARIEL COREMBERG ECLAC Buenos.
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
1
MEASUREMENT PROBLEMS MEASUREMENT PROBLEMS OF TFP PERFORMANCE IN AN OF TFP PERFORMANCE IN AN
UNSTABLE ECONOMY: UNSTABLE ECONOMY: ARGENTINA 1990-2004ARGENTINA 1990-2004
““A Case of the Tyranny of Methodology”A Case of the Tyranny of Methodology”
ARIEL COREMBERGARIEL COREMBERGECLAC Buenos AiresECLAC Buenos Aires
• (T. J. Koopmans 1947) This research applies the famous Koopman`s motto: “It is necessary to avoid Measurement without theory”
• (J. Hicks 1981)“ The measurement of capital is one of the nastiest jobs that economists have set to statisticians”.
• Z.Grilliches (1990): “procyclical fluctuations in ‘productivity’ do not make sense if we want to interpret them as a measure of the growth in the level of technology or the state of economically valuable knowledge of an economy. The US. Economy did not forget 4% of its technology between 1974 and 1975.”
• D. Jorgenson (1995): the productivity term A reflects all those effects on output growth that are not investment, where investment is understood as the commitment of current resources in the expectation of future returns, implying that these returns can be internalised by the investor.
• Heymann, Galiani y Tomassi (2004): Agents make economic decisions taking the cycle as a trend: a correct identification of TFP is important in the context of sustainability of macroeconomic configuration, wealth perceptions and competitiveness of an economy
3
OBJETIVEOBJETIVE• IDENTIFICATION OF TREND AND IDENTIFICATION OF TREND AND
GROWTH PROFILEGROWTH PROFILE
• SUSTAINABILITY OF GROWTH AND SUSTAINABILITY OF GROWTH AND COMPETITIVENESS IN THE LONG RUN: COMPETITIVENESS IN THE LONG RUN: STRICT TFPSTRICT TFP
• EMERGING UNSTABLE ECONOMIES EMERGING UNSTABLE ECONOMIES WITH RELATIVE PRICE VOLATILITY WITH RELATIVE PRICE VOLATILITY AND INCONCISTENT MACROPOLICIESAND INCONCISTENT MACROPOLICIES
• ARGENTINA 1990-2004: WHAT ABOUT ARGENTINA 1990-2004: WHAT ABOUT STRICT TFP? STRICT TFP?
User
Mas Motivación1) DProductividad inicial: baja de costos compensó apreciac moneda2) Suba de producc transables, especialmente X moi3) Sin embargo no sostenibles en el t4) Identific errónea como +Shifts in F(.): fenomenos coyunt o cíclicos + Reasignación normal de factores y sectores a Dpr+ Idem calidad no necesariamente mejoras en la organiza productiva indep de factores
Mas Motivación1) DProductividad inicial: baja de costos compensó apreciac moneda2) Suba de producc transables, especialmente X moi3) Sin embargo no sostenibles en el t4) Identific errónea como +Shifts in F(.): fenomenos coyunt o cíclicos + Reasignación normal de factores y sectores a Dpr+ Idem calidad no necesariamente mejoras en la organiza productiva indep de factores
exchange rate: import substitution and increase in
exports + growth in aggregate demand:
improvement in terms of trade as permanent
• High decreases in labor costs and Previous
Underutilization of K & L : Ld(ul: 20-10%) and Ku
(55-73)
User
Mas Motivación1) DProductividad inicial: baja de costos compensó apreciac moneda2) Suba de producc transables, especialmente X moi3) Sin embargo no sostenibles en el t4) Identific errónea como +Shifts in F(.): fenomenos coyunt o cíclicos + Reasignación normal de factores y sectores a Dpr+ Idem calidad no necesariamente mejoras en la organiza productiva indep de factores
6
SOURCE OF GROWTHSOURCE OF GROWTH
1. Increase in capital intensity
2. Improvements in productive organization independently of factor endowments (TFP)
3.3. Changes in the composition of GDP, K, LChanges in the composition of GDP, K, L
4.4. Quality changes in primary inputsQuality changes in primary inputs
5.5. Cyclical Changes in the Utilisation of Cyclical Changes in the Utilisation of Productive Factors: Labour intensity L and Productive Factors: Labour intensity L and K UtilizationK Utilization
7
y
k
Eb
E*
E**
yb
y*
0
B
A
kbka
BASIC SOURCE OF GROWTH: BASIC SOURCE OF GROWTH: TFP OR kTFP OR k
ya
Ea
8
y
k
E0
E1
E1’
y0
y1
0
A
B
k0k1
TFP OR KTFP OR KUU
9
TFP TYPOLOGIESTFP TYPOLOGIES
• APARENT TFPAPARENT TFP: INCLUDE QUALITY, COMPOSITION & UTILIZATION EFFECTS
• STRICT TFPSTRICT TFP : SHIFTS IN PRODUCTION FUNCTION DUE TO ORGANIZATION IMPROVEMENT (excludes Q, C, U effects)
10
Identification of Basic Source of Identification of Basic Source of GrowthGrowth
• Intensive Form
• Extensive Form
• Abramovitz: Solow´s Residual is the measurement of our ignorance
• Grilliches: non-measure factors and error measurement are in the Residual
Imputation of Labor Compensation of Self Employed with the Wages of Employees by Sector
Imputation of Internal Rate of Return of the Industry
Jobs
Adjustment by Part Time jobs And Double Occupation-
Employees Self Employees and others
Nr. Of Workers
Hourly Labor
By worker
Hours WorkedBy worker
Nr. Hours Worked
Labor Differentation
Explicit
Implicit
Hours Worked Differentiated by Worker
characteristics
Hours Worked By industry
MEDICION DEL INSUMO TRABAJO ( OECD)
User
Diferenciación sectorial (OECD) pero sin diferenciar por otras características hacia dentro de c/rama: suponiendo que salarios por arriba de la media reflejan elevados skills,se captura parte del cambio calidad del factor trabajo.
User
Permite evitar sesgos por doble ocupación y tiempo parcial pero no ajusta por cambios en la jornada laboral a tiempo completo como consecuencias de cambios normativos o convenios colectivos
Un incremento de la producción puede ser abastecido tanto con mayor cantidad de equipos como por un aumento en la utilización de los equipos instalados. Una caída en la demanda puede producir un retiro de maquinarias de la producción así como también una disminución en el ritmo de utilización de las existentes en el stock.
WinuE
Capital como factor productivo en terminos de los flujos de servicios que estos activos proveen a la produccióncosto de uso. Este concepto representa el precio de alquiler correspondiente al uso anual del stock de capital como factor productivo, sea por un usuario o por su propio dueño.Cabe notar que la reponderación por costo de uso permite tomar en cuenta que en realidad, un peso invertido en edificios tiene un rendimiento promedio anual menor que un peso invertido en máquinas en términos relativos, principalmente como consecuencia de que la inversión en maquinaria se recupera relativamente más rápido que la inversión edilicia como consecuencia de su menor durabilidad relativa. En otros términos, un edificio cuesta mas porque el horizonte es mayor o mayor nro de flujos anuales provee. Sin embargo, una maquinaria cuesta menos pero provee mayor cantdidad de scios anuales proporcionales a su valor activoreal interest rate negativeNo arbitrage Condition could not apply in unstable economies: No correlation between Tirk and i
Efecto Ponderador variable: L2 a L3 02-04Pondera + a K que crece poco
User
Efecto Kneto a Scios potenciales 02-04Reponderació a favor de Equipo Dur que crece poco
41
INTERNATIONAL COMPARISONS
Q, Q/L, TFP
USA EU ARG
70-95 95-04 70-95 95-04 95-04
Q 2.8 3.2 2.2 2.2 1.5 (1.9)
Q/L 1.3 2.4 2.4 1.4 -0.2 (0.3)
80-95 95-04 80-95 95-04 95-04
TFP 0.7 1.6 0.7 0.3 0.3a (-0.1S)
Q K L TFP
Hong Kong 66-91 7.3 8 3.2 2.3
Singapore 66-90 8.5 11.5 5.7 -0.3
Corea 66-90 10.4 13.7 6.4 1.6
Taiwan 66-90 9.6 12.3 5.1 2.4
WinuE
REVISAR Y PONER CIFRAS 95-04
42
SOURCE OF GROWTH IN ARGENTINA 1990-2004
59%
-38%
28%40%
56%44% 50% 57%
14%
-44%
23%
-24%
31%9% 6%
27%
28%
76% 28%28%
25% 49%53% 30%
18%63%
37%
7%
26%
33% 47%
33%
13%
62%
45%32%
19%6%
-3%
13%
68%
80%
41%
116%
43%59%
47% 40%
-100%
-50%
0%
50%
100%
150%
200%
1990-1994
1994-1995
1995-1998
1998-2001
1990-2001
2001-2002
2002-2004
1990-2004
1990-1994
1994-1995
1995-1998
1998-2001
1990-2001
2001-2002
2002-2004
1990-2004
Co
ntr
ibu
tio
n t
o A
vera
ge
An
ual
GD
P G
row
h(%
)
K L TFP
OPTIMAL METHODOLOGYTRADITIONAL METHODOLOGY
Source: Author´s estimation based on National Accounts- INDEC
43
EXTENSIVE GROWTH PROFILEEXTENSIVE GROWTH PROFILE
This Results are This Results are analogous to analogous to Young (1997) Young (1997) y Timmer and y Timmer and Van Ark Van Ark (1990) for Nic(1990) for Nic´s experience.´s experience.
%% 1990-1990-20042004
1990-1990-20012001
2002-2002-20042004
KK 5757 5656 5050
LL 3030 2525 5353
Strict TFPStrict TFP 1313 1919 -3-3
Apparent TFPApparent TFP 4040 4343 4747
44
CONCLUSIONSCONCLUSIONS
• K estimation was done following OECD and SNA: econometric estimation of depreciation, hedonic prices, and rental equivalent taking into account the reliability of Argentine statistics: K/Q & K/L lower & greater dynamism than developed countries.
• Adjustment by User Cost: Greater Performance than KW: excluding this effect could overestimate the TFP
45
CONCLUSIONSCONCLUSIONS
• Non-measure of Composition and Quality Effects in L & Substitution in Q underestimate Q/L & Strict TFP (2002-2004)
• The adjustment by Labour Intensity and K utilisation reduce the pro cyclical behaviour of TFP
46
• The importance of competitive gains of the Argentine economy through improvements in apparent cyclical TFP, generated both during the nineties and after 2002 devaluation, are unquestionable. However, doubts arise about the ability of the Argentine economy to generate the necessary productivity gains in the strict sense, independently of composition and quality effects and cyclical variations in factor utilisation, that allow to maintain a sustainable long run growth.
• The extensive growth profile diagnosed for the Argentine economy, especially during the nineties, contrasts with assessments of other authors and institutions based on the traditional methodology: without adjusting by relative price effects and factor utilisation. On the contrary, our results are analogous to the evidence found by Young (1995) and Timmer and Van Ark (2000) for Nic´s countries.
• This conclusion is based not only in what Young (1995) called the “tyranny of numbers”, by assessing strictly the consistency of the country statistical information, but also a consequence of the “tyranny of the economic cycle, macroeconomic and methodological consistency”.