Redistributive Policies and TFP Differences Across Countries

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• 研討會日期 : 2012-11-23
• 時間 : 14:30
• 主講人 : Professor Xueli Tang
• 地點 : Conference Room C103
• 演講者簡介 : Xueli Tang received his Ph.D. in Economics from Auckland University in 2008. He is currently serving as Lecturer in Economics at Deakin University. His research field is in economic growth, income and wage inequality, consumption, trade, productivity and public pensions.
• 演講摘要 : This paper derives theoretical restrictions for interpreting the data based on a neoclassical, dynamic general equilibrium model in which the institutional and technological factors as well as redistributive policy significantly alter overall productivity as measured by the conventional definition of TFP. Economists point towards cross-country differences in total factor productivity (TFP) to explain wide differences in income per capita across countries. However, the art of decomposition of per capita income differences into its various components and understanding the relative importance of various economic factors that contribute to the TFP differences rather than differences in the accumulated stock of physical and human capital has been a longstanding issue in macroeconomics and development economics. Such econometric exercise proves to be challenging in the absences of a theoretical model that maps institutional and policy parameters into TFP and accumulated inputs as an equilibrium outcome. In this paper we take up this challenge by considering a model in which the long-run TFP and input levels are endogenously determined as functions of several key parameters that reflect both institutional factors and redistributive fiscal policy. Also, the model allows us to break down TFP into two key components, which we call "technology" - which identifies the production possibility frontier and "efficiency" - which determines the location of the economy inside that frontier. We calibrate that model to three separate economies: the US, Australia and Japan. The numerical analysis of the data from those three calibrated economies highlight that TFP differences play a significant role in explaining the differences in output per capita across U.S., Japan and Australia. We then conduct simulation experiments based on random selections of a set of parameters with suitably specified distributions to match the per capita income distribution among the countries around the world and generate data for per capita output and its various components. We do a variance decomposition of analysis of that simulated data to determine the percentage of per capita income differences that could be explained via TFP differences as opposed to input differences. We find that 1). TFP differences do not explain much of the differences of per capita income if the sources of variations of TFP consist of institutional and technological differences; 2). TFP differences, however, play a significant role in explaining the differences of per capita income if the sources of variations arrive from variations in the degree of redistributive fiscal policies.