The purpose of this book is to honour D.S. Prasada Rao and his many outstanding contributions to economic measurement, including index number methods for international comparisons of prices, real incomes, output, and productivity; stochastic approaches to index numbers; purchasing power parities for the measurement of regional and global inequality and poverty; and measurement of income and economic insecurity.
This book brings together contributions by well-known and influential researchers in the field of economic measurement with special focus on topics in productivity measurement (Part I); income and health inequality, inequality of opportunity, and measurement of insecurity (Part II); index number theory and applications to consumer price index numbers, international comparisons of prices and real expenditures, and housing price index numbers (Part III). The chapters are authored by eminent researchers including Conchita D’Ambrosio, Bert Balk, Erwin Diewert, Robert Hill, Robert Inklaar, Knox Lovell, Robin Sickles, Jacques Silber and Marcel Timmer. The contributed papers offer in-depth reviews of the state of the art in these areas with a focus on the existing methods and applications, making the volume an invaluable source for both experienced researchers and new researchers, including PhD and other postgraduate students.
Author(s): Duangkamon Chotikapanich, Alicia N. Rambaldi, Nicholas Rohde
Publisher: Palgrave Macmillan
Year: 2022
Language: English
Pages: 674
City: Singapore
Foreword
Preface
Contents
List of Contributors
List of Figures
List of Tables
List of Boxes
Part I Productivity Measurement
1 Productivity Measurement: Past, Present, and Future
Introduction
From the Past to the Present
The Distant Past: Observation from Antiquity to Adam Smith, Alfred Marshall and A. C. Pigou
Observation in Antiquity
Evidence, 1500–1820 (Maddison’s Merchant Capitalist Epoch)
Evidence, 1820–1913 (Maddison’s Capitalist Epoch)
Observations of Adam Smith, Alfred Marshall, and A. C. Pigou
A Mere Century Ago: Accumulating Methods and Evidence Amidst Emerging Social Concerns
Methods
Evidence
Social Concerns
The Brief Flourishing of the European Productivity Agency
Converging to the Present: Analytical Foundations and Drivers
Analytical Foundations of Productivity Measurement
Parametric Production Functions
Non-parametric Distance Functions
Parametric and Non-parametric Value Functions
Drivers of Productivity Change
Quality Change
Technology
Organisation
Institutions
Geography
Productivity Dispersion, Productivity Gaps, Distance to Frontier and Zombies
Expanding the Scope of Productivity Analysis Redux: Inclusive Green Growth
The Future: Confronting Two Challenges of Transcendent Significance
Productivity and the Pandemic Depression
Productivity and Climate Change
Linkages Between the Two Challenges
Conclusions
References
2 Symmetric Decompositions of Aggregate Output and Labour Productivity Growth: On Levels, (Non-)Additivity, and Misallocation
Introduction
Decomposition of Output Growth
Decomposition of (Simple) Labour Productivity Growth
Additivity and Misallocation
How to Overcome Non-additivity
Conclusion
References
3 Efficiency Analysis with Stochastic Frontier Models Using Popular Statistical Softwares
Introduction
Basic Stochastic Frontier Models
Aigner et al. (1977) Model
Implementation of ALS Model
Early Generation of Stochastic Panel Data Models
Schmidt and Sickles (1984) Model
Implementation of Schmidt and Sickles (1984) Model
Cornwell et al. (1990) Model
Implementation of Cornwell et al. (1990) Model
Kumbhakar (1990) and Battese and Coelli (1992) Models
Implementation of Kumbhakar (1990) and Battese and Coelli (1992) Models
Recent Advances of Stochastic Panel Data Models
Greene (2005a, 2005b) Models
Implementation of Greene (2005a, 2005b) Models
Colombi et al. (2014) and Kumbhakar et al. (2014) Models
Implementation of Colombi et al. (2014) and Kumbhakar et al. (2014) Models
Stochastic Frontier Models with Determinants of Inefficiency
Popular Models
Implementation of Stochastic Frontier Models with Determinants of Inefficiency
Semi-parametric Stochastic Frontier Models
The Variety of Models
Simar et al. (2017) Model
Implementation of Simar et al. (2017) Model
Empirical Illustration
Concluding Remarks
Appendix
References
4 Efficiency and Productivity Analysis from a System Perspective: Historical Overview
Prologo
The Origins of Network DEA (1939–1975)
Kantorovich (1939)
Koopmans
Johansen
Summing Up: The KKJ (Kantorovich-Koopmans-Johansen) Model
Shephard, Farrell and the “Black Box” Technology (1977–1999)
Rediscovery of KKJ (2000–2020)
Network Models
Dynamic Network DEA Models
Series Network Models
Parallel Network Models
Multi-Level or Hierarchical Models
Industry Models
Allocability Models
Summing Up
Topics for Future Research
Efficiency Measurement vs Structure of the Network
Unobserved Allocations
Costly Reallocation
Connection Between Network Analysis and the Black Box Analysis
Network Stochastic Frontiers
Micro-foundation of the Aggregate Production Function
Epilogo
References
Part II Income Distributions and Inequality and Insecurity
5 Modelling Income Distributions with Limited Data
Introduction
Concepts
Inequality Measures
Poverty Measures
Data Setup
Estimation
Estimation with Fixed x, Random c, Random overline2yi
MD Estimator 1
MD Estimator 2
MD Estimator 3
A Quasi ML Estimator
Estimation with Fixed c, Random x, Random overline2yi
MD Estimation
ML Estimation
Specification of Distributions, Inequality and Poverty Measures
Simple Recipes for Two Distributions
Lognormal Distribution
Pareto-Lognormal Distribution
Concluding Remarks
References
6 Empirical Methods for Modelling Economic Insecurity
Introduction
Measurement Concepts
Subjective Methods
Aggregate Methods
Rich Countries
Poor Countries
Axiomatic Methods
The Bossert et al. (2019) Method
Bossert and D’Ambrosio (2013)
Micro-Econometric Methods
Hazard Indicators
Transitory Variance
Synthetic Indices
Methods Based on Predictive Densities
Empirical Applications
Aggregate Data
Microdata
EI and Social Disadvantage
Regression Models
Conclusion
References
7 Measuring Inequality in Health
Introduction
Cardinal Variables and the Measurement of Inequality in Health
The Univariate Approach to Measuring Health Inequality
The Bivariate Approach to Health Inequality Measurement
The Univariate Approach to Measuring Health Achievements
A Pro-poor Approach to the Measurement of Health Achievement
The Measurement of Inequality in Health Opportunities
The Univariate Approach to Defining Indices of Inequality of Opportunities
The Bivariate Approach to Measuring Inequality of Opportunities
The Concept of Human Opportunity Index
Defining “Welfare-Related” Indices of Opportunity
Defining “Pro-poor” Human Opportunity Indices
Measuring Health Inequality and Polarization with Ordinal Variables
Partial Orderings
Inequality and Polarization Indices
Conclusion
References
8 Inequality of Opportunity: Theoretical Considerations and Recent Empirical Evidence
Introduction
The Equality of Opportunity Approach
The Theoretical Model
The Empirical Model
Empirical Evidence
Inequality of Opportunity in Developed Countries
Inequality of Opportunity in the Monetary Space
Inequality of Opportunity in the Non-Monetary Space: Education
Inequality of Opportunity in the Non-monetary Space: Health
Less Developed Countries
Inequality of Opportunity in the Monetary Space
Inequality of Opportunity in the Non-Monetary Space: Education
Inequality of Opportunity in the Non-Monetary Space: Health
The Global Perspective
Conclusions
References
Part III Index Numbers and International Comparisons of Prices and Real Expenditures
9 Framing Measurement Beyond GDP
Introduction
Production Sphere: What Gets in and What Comes Out of the “Factory Gates”
Well-being Sphere: What Shapes People’s Lives?
Asset Sphere: The Resources for Future Well-Being
References
10 Hedonic Models and House Price Index Numbers
Introduction
Hedonic Methods for Constructing House Price Indices
Indices Covered in Chapter 5 of Eurostat’s HRPPI
Time-Dummy Method
Average Characteristic Method
Hedonic Imputation Method
Rolling-Time-Dummy Method
Repricing Method
Controlling for Location
Controlling for Location Dependence in the Hedonic Log-Price Function
Controlling for Location Dependence in the Variance of the Log-Price Function
Controlling for Location Dependence in the Mean and the Variance of Log-Prices
Empirical Feasibility
Constructing Separate Price Indices for Land and Structures
Extensions
Higher Frequency Indices
Measuring Price Changes for the Stock of Housing
Conclusion
References
11 Scanner Data, Elementary Price Indexes and the Chain Drift Problem
Introduction
Comparing CES Price Levels and Price Indexes
Using Means of Order r to Aggregate Price Ratios
Relationships Between Some Share Weighted Price Indexes
Relationships Between the Jevons, Geometric Laspeyres, Geometric Paasche and Törnqvist Price Indexes
Relationships Between Superlative Fixed Base Indexes and Geometric Indexes That Use Average Annual Shares as Weights
To Chain or Not to Chain
Relationships Between the Törnqvist Index and the GEKS and CCDI Multilateral Indexes
Unit Value Price and Quantity Indexes
Quality Adjusted Unit Value Price and Quantity Indexes
Relationships Between Lowe and Fisher Indexes
Geary Khamis Multilateral Indexes
Time Product Dummy Regressions: The Case of no Missing Observations
Time Product Dummy Regressions: The Case of Missing Observations
Weighted Time Product Dummy Regressions: The Bilateral Case
Weighted Time Product Dummy Regressions: The Bilateral Case with Missing Observations
Weighted Time Product Dummy Regressions: The General Case
Linking Based on Relative Price Similarity
Inflation Adjusted Carry Forward and Backward Imputed Prices
Linking Based on Relative Price and Quantity Similarity
The Axiomatic Approach to Multilateral Price Levels
Summary of Results
Conclusion
References
12 The Stochastic Approach to International Price Comparisons
Introduction
The ICP Framework
Notation and Main Aggregation Methods
Stochastic Approach to Rao, IDB and GK Indexes
Multilateral Comparisons at Basic Heading Level
The Stochastic Approach to GEKS
Conclusion
References
13 Inconsistencies in Cross-Country Price Comparisons over Time: Patterns and Facts
Introduction
Conceptual Framework
Data
Results
Are More Recent Global Benchmarks More Consistent?
Is There More Consistency Between More Similar Countries?
Is There More Consistency for Products that Are Easier to Price and Compare Across Countries?
Would More Frequent Benchmark Comparisons Lead to More Consistency?
Do Inconsistencies Distort the International Income Distribution?
Conclusions
References
