American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Growth Accounting with Misallocation: Or, Doing Less with More in Singapore
American Economic Journal: Macroeconomics
vol. 3,
no. 2, April 2011
(pp. 29–74)
Abstract
We show that in a two-sector economy with heterogeneous capital subsidies and monopoly power, primal and dual measures of TFP growth can diverge from each other as well as from true technology. These distortions give rise to dynamic reallocation effects that imply technology growth needs to be measured from the bottom up rather than from the top down. Using Singapore as an example, we show how incomplete data can be used to estimate aggregate and sectoral technology growth as well as reallocation effects. Our framework can reconcile divergent TFP estimates in Singapore and can resolve other empirical puzzles regarding Asian development. (JEL E22, E23, E25, O33, O41, O47)Citation
Fernald, John, and Brent Neiman. 2011. "Growth Accounting with Misallocation: Or, Doing Less with More in Singapore." American Economic Journal: Macroeconomics 3 (2): 29–74. DOI: 10.1257/mac.3.2.29Additional Materials
JEL Classification
- E22 Capital; Investment; Capacity
- E23 Macroeconomics: Production
- E25 Aggregate Factor Income Distribution
- O33 Technological Change: Choices and Consequences; Diffusion Processes
- O41 One, Two, and Multisector Growth Models
- O47 Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence