BTS | Appendix A. Basic Growth - Accounting Methodology

Appendix A. Basic Growth - Accounting Methodology

The empirical relationship used to estimate growth of multifactor productivity by the basic growth-accounting methodology is shown below:

(delta uppercase t over uppercase t equals to (delta uppercase q over uppercase q minus [ (lowercase alpha times delta labor over labor) plus (lowercase beta times delta capital over capital) plus (lowercase gamma times delta intermediate inputs over intermediate inputs) ]

Where:

delta uppercase t over uppercase t = Growth of MFP

delta uppercase q over uppercase q = Growth of gross output

delta labor over labor = Growth of labor

delta capital over capital = Growth of capital

delta intermediate inputs over intermediate inputs = Growth of intermediate inputs

α = Share of labor cost in output

β = Share of capital cost in output

γ = Share of intermediate inputs cost in output.