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| Total Factor Productivity× | Törnqvist Index× | |
|---|---|---|
| Field | Economics | Economics |
| Family≠ | Regression model | Process / pipeline |
| Year of origin≠ | 1957 | 1936 |
| Originator≠ | Robert Solow; Caves, Christensen & Diewert | Leo Törnqvist; superlative theory by W. Erwin Diewert |
| Type≠ | Productivity measurement via index numbers and production functions | Superlative index number for aggregating prices or quantities |
| Seminal source≠ | Solow, R. M. (1957). Technical change and the aggregate production function. The Review of Economics and Statistics, 39(3), 312–320. DOI ↗ | Diewert, W. E. (1976). Exact and superlative index numbers. Journal of Econometrics, 4(2), 115–145. DOI ↗ |
| Aliases | TFP, Multifactor Productivity, MFP, Joint Factor Productivity | Tornqvist Index, Tornqvist-Theil Index, Translog Index, Tornqvist Price Index |
| Related≠ | 4 | 3 |
| Summary≠ | Total factor productivity (TFP), also called multifactor productivity, measures how much output an economic unit produces from a given bundle of all its inputs taken together — capital, labour, and often intermediate materials. It is the efficiency with which inputs are jointly transformed into output, and it captures everything that raises output without raising measured inputs: technology, organization, and the reallocation of resources. TFP is measured in two broad ways: the index-number approach, which forms the ratio of an aggregate output index to an aggregate input index using economically justified (superlative) weights, and the econometric production-function approach, which estimates the technology and recovers productivity as an unobserved term. | The Törnqvist index is a superlative index number used to aggregate many individual prices or quantities into a single measure of overall price change or quantity change between two periods. It is a weighted geometric mean of the individual price (or quantity) relatives, where each item's weight is the average of its value shares in the two periods. Because it is 'exact' for the flexible translog aggregator function, it is the standard tool for constructing productivity indices and is widely used in national accounts, productivity statistics, and price measurement. |
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