Adjusting Output and Productivity Indexes for Changes in the Terms of Trade / W. Erwin Diewert, Catherine J. Morrison.

Format:

Book

Author/Creator:

Diewert, W. Erwin.

Contributor:

National Bureau of Economic Research.

Morrison, Catherine J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1564.

NBER working paper series no. w1564

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1985.

Summary:

In this paper we employ index number theory in addressing the problem of adjusting real national income and real domestic product for changes in a country's terms of trade. More specifically, using recent developments in the theory of production, we address the problems related to measuring: (i) real output produced and real input utilized by the private business sector;(ii) productivity growth or technical change; (iii) the effects on domestic real output of changes in the terms of trade; and (iv) the impact on final sales to domestic purchasers of changes in the balance of payments deficit, in a consistent accounting framework.This treatment of international trade allows us to undertake comparative statics analyses using only production theory, whereas in the traditional paradigm which treats traded goods as perfectly substitutable with a class of domestic goods, a general equilibrium framework is required. We illustrate our suggested solutions using U.S. data for the years 1968-82.

Notes:

Print version record

February 1985.