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Measuring Total Factor Productivity and Verifying Its Determinants in Iran

Khazra, Nazanin | 2012

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 43315 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Nili, Masoud
  7. Abstract:
  8. The simplest definition of Total Factor Productivity is the rate of converting inputs to outputs. In other words, with fixed inputs and a raise in the Total Factor Productivity, more output can be achieved. In this study, we review the existing methods for calculating this variable and its determining factors. On the basis of Diewert’s criteria, Fisher index is known to be the most appropriate indicator to calculate production, price and productivity indices. Fisher index is obtained by dividing the index of output to input in which in addition to values of output and input, price data are also used. Between prices and values used in this calculation only price series for wages are not available. Hence, using household budget data, time series of wages for nine economic sectors are calculated. Using chained Fisher index method, time series of Total Factor Productivity for the years 1363 to 1388 is calculated. Since this study begins from the mid Iran-Iraq war, productivity analysis has been divided into five periods. Considering the calculated TFP series, the average annual productivity growth in the years before the end of the war (1363-1367) is -4 percent, in the First Development Plan (1368-137), 3.4 percent, in the Second Development Plan (1374-1378), 0.5 percent, in the Third Development Plan (1379-1383), 0.9 percent and in the Fourth Development Plan (1384-1388) is -0.1 percent. After calculating TFP series, an autoregressive distributed lag model was used to investigate the effects of human capital, the real exchange rate, oil revenues and the degree of openness of the economy on Total Factor Productivity. The coefficients of all mentioned variables in the short-term and long-term equations are positive and significant.

  9. Keywords:
  10. Total Factor Productivity (TFP) ; Iran Economy ; Index Number ; Total Factor Productivity (TFP)Determinants

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