An index number method for estimating scale economies and technical progress using time-series of cross-section data: Sources of total factor productivity growth for Japanese manufacturing, 1964-1988

Takanobu Nakajima, Masao Nakamura, Kanji Yoshioka

Research output: Contribution to journalArticle

15 Citations (Scopus)

Abstract

Sample multicollinearity often makes it difficult to estimate returns to scale. We present an index number method to overcome potential multicollinearity problems when the production function is homogeneous of degree k We apply our method to estimate empirically the effects of returns to scale and technical progress on growth in total factor productivity (TFP) using establishment data for Japanese manufacturing industries. We find that, while significant scale economies exist in many manufacturing industries, the TFP growth in the last twenty-five years is attributable primarily to technical progress. This finding also validates the current practice of assuming constant-retums-to-scale production functions in macroeconometric modelling.

Original languageEnglish
Pages (from-to)310-334
Number of pages25
JournalJapanese Economic Review
Volume49
Issue number3
Publication statusPublished - 1998

Fingerprint

Scale economies
Index numbers
Manufacturing
Multicollinearity
Cross section
Data sources
Technical progress
Total factor productivity growth
Manufacturing industries
Returns to scale
Production function
Total factor productivity
Macroeconometric modelling

ASJC Scopus subject areas

  • Economics and Econometrics

Cite this

@article{58bacea5cc844c1b84489051ef35b96f,
title = "An index number method for estimating scale economies and technical progress using time-series of cross-section data: Sources of total factor productivity growth for Japanese manufacturing, 1964-1988",
abstract = "Sample multicollinearity often makes it difficult to estimate returns to scale. We present an index number method to overcome potential multicollinearity problems when the production function is homogeneous of degree k We apply our method to estimate empirically the effects of returns to scale and technical progress on growth in total factor productivity (TFP) using establishment data for Japanese manufacturing industries. We find that, while significant scale economies exist in many manufacturing industries, the TFP growth in the last twenty-five years is attributable primarily to technical progress. This finding also validates the current practice of assuming constant-retums-to-scale production functions in macroeconometric modelling.",
author = "Takanobu Nakajima and Masao Nakamura and Kanji Yoshioka",
year = "1998",
language = "English",
volume = "49",
pages = "310--334",
journal = "Japanese Economic Review",
issn = "1352-4739",
publisher = "Wiley-Blackwell",
number = "3",

}

TY - JOUR

T1 - An index number method for estimating scale economies and technical progress using time-series of cross-section data

T2 - Sources of total factor productivity growth for Japanese manufacturing, 1964-1988

AU - Nakajima, Takanobu

AU - Nakamura, Masao

AU - Yoshioka, Kanji

PY - 1998

Y1 - 1998

N2 - Sample multicollinearity often makes it difficult to estimate returns to scale. We present an index number method to overcome potential multicollinearity problems when the production function is homogeneous of degree k We apply our method to estimate empirically the effects of returns to scale and technical progress on growth in total factor productivity (TFP) using establishment data for Japanese manufacturing industries. We find that, while significant scale economies exist in many manufacturing industries, the TFP growth in the last twenty-five years is attributable primarily to technical progress. This finding also validates the current practice of assuming constant-retums-to-scale production functions in macroeconometric modelling.

AB - Sample multicollinearity often makes it difficult to estimate returns to scale. We present an index number method to overcome potential multicollinearity problems when the production function is homogeneous of degree k We apply our method to estimate empirically the effects of returns to scale and technical progress on growth in total factor productivity (TFP) using establishment data for Japanese manufacturing industries. We find that, while significant scale economies exist in many manufacturing industries, the TFP growth in the last twenty-five years is attributable primarily to technical progress. This finding also validates the current practice of assuming constant-retums-to-scale production functions in macroeconometric modelling.

UR - http://www.scopus.com/inward/record.url?scp=0031679422&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=0031679422&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:0031679422

VL - 49

SP - 310

EP - 334

JO - Japanese Economic Review

JF - Japanese Economic Review

SN - 1352-4739

IS - 3

ER -