Latin America: Total factor productivity and its components

Araujo, Jair Andrade
Feitosa, Débora Gaspar
Silva, Almir Bittencourt da

2014-12

3
LC/G.2629-P

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This article applies the stochastic-frontier model to examine total factor productivity (tfp) and its components in Latin America between 1960 and 2010. The likelihood-ratio test shows that, for a selection of Latin American countries over the 50 years analysed, the macroeconomic variables of technical inefficiency included in the model generally have a significant effect; and they allow for a better understanding of technical inefficiency throughout the region. The key variables explaining technical inefficiency in the selected countries are public expenditure and the inflation rate; and there is also an inverse relation between technical inefficiency and the extent to which local prices diverge from purchasing power parity.

PRODUCTIVIDAD; MEDICION; ANALISIS MATEMATICO; MODELOS ECONOMETRICOS; PRODUCTIVITY; MEASUREMENT; MATHEMATICAL ANALYSIS; ECONOMETRIC MODELS;