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11-06-10 | 1 Pieter Woltjer & Herman de Jong University of Groningen Faculty of Economics and Business Output and productivity measurement in a US/UK comparison,

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Presentation on theme: "11-06-10 | 1 Pieter Woltjer & Herman de Jong University of Groningen Faculty of Economics and Business Output and productivity measurement in a US/UK comparison,"— Presentation transcript:

1 | 1 Pieter Woltjer & Herman de Jong University of Groningen Faculty of Economics and Business Output and productivity measurement in a US/UK comparison, Reconciling sectoral benchmarks and time series

2 Introduction Long-span projections criticized through confrontations with benchmarks (Ward & Devereux, 2003) Sectoral, industry-of-origin, studies suffer from the same problems (Broadberry & Burhop, 2007) For pre-war period some benchmarks are available to cross- check time series projections Mostly based on quantity approach (Rostas, 1948) Data is available to apply ICOP unit value approach (Maddison & van Ark, 1988) Recent studies stress advantages of ICOP approach over quantity based comparisons (Fremdling et al., 2007) | 2

3 Outline Examine available benchmark/time series evidence for first half 20 th century for the US and the UK Discuss differences benchmarking methods, quantity vs. unit value approach Analyze comparative productivity using time series and shift-share Compare benchmark and time series, is reconciliation feasible? | 3

4 | 4 US productivity, 1935 (UK =100) IndustryRostasde Jong & Woltjer (quantity)(unit value) Food, Drink and Tobacco Textiles and Clothing Chemicals Metals Engineering Miscellaneous Total Manufacturing Sources: Broadberry & Crafts (1992); Rostas (1948); de Jong & Woltjer (2010) Benchmark comparisons

5 | 5 Long-span sectoral projections

6 | 6 Disentangling prod. growth (1)

7 | 7 Disentangling prod. growth (2)

8 Reconciliation time series and benchmarks Are the results from benchmarks and time series consistent, or transitive? Transitivity across time and space not realistic or reasonable to impose on international comparison (Dalgaard & Sorensen, 2002) Intransitivity error will increase if individual price movements are large (length of period) and if sectoral structure of countries under comparison differs (Szilagyi, 1984) Sharp changes in price level compared to the base country tend to worsen intransitivity error (Aten & Heston, 2002) Early 20 th century could expect large deviations (wars, inflation) | 8

9 | 9 Transitivity in practice (1)

10 | 10 Transitivity in practice (2)

11 Reconciling time series and benchmarks Discrepancies of projections will depend largely on the accuracy of underlying benchmarks and time series Benchmarks are affected by measurement errors (e.g. quality of products) and representativeness issues (e.g. selection bias) ICOP approach represents substantial improvement over older quantity based international comparisons Time series suffer from measurement errors (e.g. technological development) and international inconsistencies (differences in national accounting) New historical national accounts rely on more systematic methodology, aids international comparisons | 11

12 Conclusions For the moment discrepancy between both methods remains We argue that there is a clear need for more (ICOP) benchmark studies for early 20 th century In addition, future research should put more emphasis on the link between benchmarks and long-span projections Intransitivity and measurement errors can be quantified by analyzing shifts in international and inter-temporal weights Historical national accounts should be revisited, and supplemented by new, basic, unchained time series based on price data from direct benchmark comparisons Historical national accounts stress the comparability of methodologies and coverage over time as well as between countries | 12


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