CERE Working Papers, CERE - the Center for Environmental and Resource Economics
Productivity: Should We Include Bads?
(), Shawna Grosskopf
(), Tommy Lundgren
(), Per-Olov Marklund
() and Wenchao Zhou
Abstract: This paper studies the interaction between economic and
environmental performance. Applying the directional output distance
function approach, the purpose is to compare estimates of Luenberger total
factor productivity indicators, including and excluding bad outputs.
Specifically, based on unique firm level data from Swedish manufacturing
covering the period 1990 to 2008, we explore to what extent excluding bad
outputs leads to erroneous productivity measurement. The main conclusion is
that bad outputs should not only be included in the estimations, but also
reduction in bad outputs should be credited. From this point of view the
directional output distance function approach and the Luenberger indicator
serves as an appropriate basis of productivity measurement.
Keywords: Swedish manufacturing; Luenberger indicator; emissions; productivity; (follow links to similar papers)
JEL-Codes: D24; Q01; Q53; (follow links to similar papers)
26 pages, May 31, 2012
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