Erwin Diewert - Academia.edu (original) (raw)
Papers by Erwin Diewert
Journal of Statistical Science and Application, 2015
Economics Working Papers, Dec 23, 2006
The paper considers how to measure capital in a model where technical progress is either embodied... more The paper considers how to measure capital in a model where technical progress is either embodied in new units of capital or it is "disembodied" and simply causes the price of capital services to fall. The disembodied case is considered in sections 2-4. Sections 2 and 3 set out standard vintage capital aggregation models when there is no embodied technical progress. Section 4 discusses disembodied obsolescence in more detail. Section 5 introduces new (more efficient) models of the capital good so that technical progress is embodied in the new models. Section 6 shows how the parameters in the Jorgenson model of capital services could be estimated by statistical agencies if their investment surveys covered sales and retirements of used assets as well as purchases of new assets. Section 7 concludes.
The paper uses hedonic regression techniques in order to decompose the price of a house into land... more The paper uses hedonic regression techniques in order to decompose the price of a house into land and structure components using readily available real estate sales data for a Dutch city. In order to get sensible results, it proved necessary to use a nonlinear regression model using data that covered multiple time periods. It also proved to be necessary to impose some monotonicity restrictions on the price of land and structures.
Productivity Measurement and Analysis
PRODUCTIVITY MEASUREMENT AND ANALYSIS–ISBN 978-92-64-04455-5–© OECD 2008 550–23. ESTIMATES OF LAB... more PRODUCTIVITY MEASUREMENT AND ANALYSIS–ISBN 978-92-64-04455-5–© OECD 2008 550–23. ESTIMATES OF LABOR AND TOTAL FACTOR PRODUCTIVITY BY 72 INDUSTRIES IN KOREA (1970–2003) Table 23-A2 Sectoral TFP Growth in Service (%) T 23–A2 Sectoral TFP Growth in Service (%) Before crisis After crisis Code Industry 72–'79 80–'89 90–'99 90–'98 99–'03 72–'03 40 Electricity supply 2.20 0.76 1.10 1.18 0.77 1.24 41 Gas supply 15.03 14.00 7.31 7.10 2.29 10.34 42 Water supply 8.67 3.38-2.19-2.51-0.39 2.46 43 Construction-0.13 ...
Estimates of GDP are sensitive to whether a business expenditure is treated as an investment or a... more Estimates of GDP are sensitive to whether a business expenditure is treated as an investment or an intermediate input. Shifting an expenditure category from intermediate expenditures to investment expenditures increases GDP. While the international guide to measurement (the SNA-93) recognizes that R&D has certain characteristics that make it more akin to an investment than an intermediate expenditure, it did not recommend that R&D be treated as an investment because of problems in finding a "clear criteria for delineating (R&D and other such activities) from other activities". This paper examines whether the use of the OECD Frascati definition is adequate for this purpose. It argues that it is too narrow and that attempts to modify the National Accounts would not be well served by its adoption. In particular, it argues that the appropriate concept of R&D that is required for the Accounts should incorporate a broad range of science-based innovation costs and that this broader R&D concept is amenable to measurement.
J Econ, 2010
Caves, Christensen and Diewert proposed a method for estimating a theoretical productivity index ... more Caves, Christensen and Diewert proposed a method for estimating a theoretical productivity index for a firm using Törnqvist input and output indexes, augmented by exogenous estimates of local returns to scale. However, in order to implement their method, they assumed that the firm maximized revenue in each period, conditional on the observed input vector in each period, taking output prices as fixed. This assumption is not warranted when there are increasing returns to scale. Thus in the present paper, it is assumed that the firm solves a monopolistic profit maximization problem when there are increasing returns to scale and the results of Caves, Christensen and Diewert are modified in accordance with this assumption.
At the lowest level of aggregation of a CPI or PPI quantity information is usually unavailable an... more At the lowest level of aggregation of a CPI or PPI quantity information is usually unavailable and nothing but matched samples of prices are used for the index computation. Familiar indexes used at this level of aggregation are those of Dutot, Carli, and Jevons. An important, yet often overlooked characteristic of these and similar indexes is that they are sample statistics, whose properties can be studied from the sampling point of view. This paper provides a systematic study of this topic and concludes with a number of recommendations for statistical practice.
With the increasing pace of infrastructure reform in most countries there has been considerable d... more With the increasing pace of infrastructure reform in most countries there has been considerable debate about who has benefited from reform: is it shareholders, consumers, employees or taxpayers? Concurrent changes in output and input prices, productivity and firm size have made answering this question difficult. This paper uses a new indexing method allowing changes in a firm's gross return to capital to be broken down into separate effects due to productivity change, price changes and growth in the firm's size. This allows us to construct a series of 'what-if' scenarios where the separate contribution of productivity, output and input price changes and changes in firm size can clearly be seen. This in turn allows us to calculate the distribution of the benefits of productivity improvements between consumers, labour and shareholders. The methodology will be of interest to consumers, utilities, shareholders and regulators and could form the basis of a new approach to utility regulation.
Economics Working Papers, 2009
Van Veelen and van der Weide (2008) in a recent paper provided some interesting new perspectives ... more Van Veelen and van der Weide (2008) in a recent paper provided some interesting new perspectives on the index number problem. However, the present paper argues that their definitions of a true index and an exact index are different from the standard definitions in the literature. The differences between the various approaches is explained in the present paper.
Measurement of capital is usually based on a set of specific assumptions. In recent years, studie... more Measurement of capital is usually based on a set of specific assumptions. In recent years, studies of intangible and of environmental assets have become key vehicles for the advance of the theory and measurement of capital. Both have features that do not fit the assumptions. This paper begins by sorting out the limitations imposed by the narrow assumptions. The examination enables a further enquiry into what it means for capital to be irreversibly committed to an economic activity. A method of measuring capital is derived that puts the measurement of all forms of capital in a unified analytic framework. Key words: intangible capital, environmental capital, depreciation, deterioration, capital value, irreversible investment
SSRN Electronic Journal, 2000
The paper considers some of the problems associated with the indirectly measured components of fi... more The paper considers some of the problems associated with the indirectly measured components of financial service outputs in the System of National Accounts (SNA), termed FISIM (Financial Intermediation Services Indirectly Measured). The paper utilizes a user cost and supplier benefit approach to the determination of the value of various financial services in the banking sector. The present paper also attempts to integrate the balance sheet accounts in the SNA with the usual flow accounts. An empirical example of various nominal output concepts that could be applied to the U.S. commercial banking sector is presented.
SSRN Electronic Journal, 2000
Currently over one-third of U.S. trade in goods takes place between related parties. The valuatio... more Currently over one-third of U.S. trade in goods takes place between related parties. The valuation of these goods has been subject to much controversy and criticism over the years, as companies have been accused of over or under valuing these goods in order to minimize business taxes and/or import duties. A myriad of rules and regulations developed (in the case of the United States) by both the Internal Revenue Service as well as the Customs Service deal with these valuations. For the purpose of calculating the 2 export and import price indexes, however, the question we attempt to answer is, "Conceptually, what is the ideal import/export price the Bureau of Labor Statistics should be collecting in those instances where a transaction is between related parties." We demonstrate that the ideal price for incorporation into these price indexes may be very difficult to calculate, and that the selection of an alternative arms length transaction may be a more fruitful approach.
Handbook on Residential Property Price Indices, 2013
The views expressed in this Working Paper are those of the author(s) and do not necessarily repre... more The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
Handbook on Residential Property Price Indices, 2013
Journal of Statistical Science and Application, 2015
Economics Working Papers, Dec 23, 2006
The paper considers how to measure capital in a model where technical progress is either embodied... more The paper considers how to measure capital in a model where technical progress is either embodied in new units of capital or it is "disembodied" and simply causes the price of capital services to fall. The disembodied case is considered in sections 2-4. Sections 2 and 3 set out standard vintage capital aggregation models when there is no embodied technical progress. Section 4 discusses disembodied obsolescence in more detail. Section 5 introduces new (more efficient) models of the capital good so that technical progress is embodied in the new models. Section 6 shows how the parameters in the Jorgenson model of capital services could be estimated by statistical agencies if their investment surveys covered sales and retirements of used assets as well as purchases of new assets. Section 7 concludes.
The paper uses hedonic regression techniques in order to decompose the price of a house into land... more The paper uses hedonic regression techniques in order to decompose the price of a house into land and structure components using readily available real estate sales data for a Dutch city. In order to get sensible results, it proved necessary to use a nonlinear regression model using data that covered multiple time periods. It also proved to be necessary to impose some monotonicity restrictions on the price of land and structures.
Productivity Measurement and Analysis
PRODUCTIVITY MEASUREMENT AND ANALYSIS–ISBN 978-92-64-04455-5–© OECD 2008 550–23. ESTIMATES OF LAB... more PRODUCTIVITY MEASUREMENT AND ANALYSIS–ISBN 978-92-64-04455-5–© OECD 2008 550–23. ESTIMATES OF LABOR AND TOTAL FACTOR PRODUCTIVITY BY 72 INDUSTRIES IN KOREA (1970–2003) Table 23-A2 Sectoral TFP Growth in Service (%) T 23–A2 Sectoral TFP Growth in Service (%) Before crisis After crisis Code Industry 72–'79 80–'89 90–'99 90–'98 99–'03 72–'03 40 Electricity supply 2.20 0.76 1.10 1.18 0.77 1.24 41 Gas supply 15.03 14.00 7.31 7.10 2.29 10.34 42 Water supply 8.67 3.38-2.19-2.51-0.39 2.46 43 Construction-0.13 ...
Estimates of GDP are sensitive to whether a business expenditure is treated as an investment or a... more Estimates of GDP are sensitive to whether a business expenditure is treated as an investment or an intermediate input. Shifting an expenditure category from intermediate expenditures to investment expenditures increases GDP. While the international guide to measurement (the SNA-93) recognizes that R&D has certain characteristics that make it more akin to an investment than an intermediate expenditure, it did not recommend that R&D be treated as an investment because of problems in finding a "clear criteria for delineating (R&D and other such activities) from other activities". This paper examines whether the use of the OECD Frascati definition is adequate for this purpose. It argues that it is too narrow and that attempts to modify the National Accounts would not be well served by its adoption. In particular, it argues that the appropriate concept of R&D that is required for the Accounts should incorporate a broad range of science-based innovation costs and that this broader R&D concept is amenable to measurement.
J Econ, 2010
Caves, Christensen and Diewert proposed a method for estimating a theoretical productivity index ... more Caves, Christensen and Diewert proposed a method for estimating a theoretical productivity index for a firm using Törnqvist input and output indexes, augmented by exogenous estimates of local returns to scale. However, in order to implement their method, they assumed that the firm maximized revenue in each period, conditional on the observed input vector in each period, taking output prices as fixed. This assumption is not warranted when there are increasing returns to scale. Thus in the present paper, it is assumed that the firm solves a monopolistic profit maximization problem when there are increasing returns to scale and the results of Caves, Christensen and Diewert are modified in accordance with this assumption.
At the lowest level of aggregation of a CPI or PPI quantity information is usually unavailable an... more At the lowest level of aggregation of a CPI or PPI quantity information is usually unavailable and nothing but matched samples of prices are used for the index computation. Familiar indexes used at this level of aggregation are those of Dutot, Carli, and Jevons. An important, yet often overlooked characteristic of these and similar indexes is that they are sample statistics, whose properties can be studied from the sampling point of view. This paper provides a systematic study of this topic and concludes with a number of recommendations for statistical practice.
With the increasing pace of infrastructure reform in most countries there has been considerable d... more With the increasing pace of infrastructure reform in most countries there has been considerable debate about who has benefited from reform: is it shareholders, consumers, employees or taxpayers? Concurrent changes in output and input prices, productivity and firm size have made answering this question difficult. This paper uses a new indexing method allowing changes in a firm's gross return to capital to be broken down into separate effects due to productivity change, price changes and growth in the firm's size. This allows us to construct a series of 'what-if' scenarios where the separate contribution of productivity, output and input price changes and changes in firm size can clearly be seen. This in turn allows us to calculate the distribution of the benefits of productivity improvements between consumers, labour and shareholders. The methodology will be of interest to consumers, utilities, shareholders and regulators and could form the basis of a new approach to utility regulation.
Economics Working Papers, 2009
Van Veelen and van der Weide (2008) in a recent paper provided some interesting new perspectives ... more Van Veelen and van der Weide (2008) in a recent paper provided some interesting new perspectives on the index number problem. However, the present paper argues that their definitions of a true index and an exact index are different from the standard definitions in the literature. The differences between the various approaches is explained in the present paper.
Measurement of capital is usually based on a set of specific assumptions. In recent years, studie... more Measurement of capital is usually based on a set of specific assumptions. In recent years, studies of intangible and of environmental assets have become key vehicles for the advance of the theory and measurement of capital. Both have features that do not fit the assumptions. This paper begins by sorting out the limitations imposed by the narrow assumptions. The examination enables a further enquiry into what it means for capital to be irreversibly committed to an economic activity. A method of measuring capital is derived that puts the measurement of all forms of capital in a unified analytic framework. Key words: intangible capital, environmental capital, depreciation, deterioration, capital value, irreversible investment
SSRN Electronic Journal, 2000
The paper considers some of the problems associated with the indirectly measured components of fi... more The paper considers some of the problems associated with the indirectly measured components of financial service outputs in the System of National Accounts (SNA), termed FISIM (Financial Intermediation Services Indirectly Measured). The paper utilizes a user cost and supplier benefit approach to the determination of the value of various financial services in the banking sector. The present paper also attempts to integrate the balance sheet accounts in the SNA with the usual flow accounts. An empirical example of various nominal output concepts that could be applied to the U.S. commercial banking sector is presented.
SSRN Electronic Journal, 2000
Currently over one-third of U.S. trade in goods takes place between related parties. The valuatio... more Currently over one-third of U.S. trade in goods takes place between related parties. The valuation of these goods has been subject to much controversy and criticism over the years, as companies have been accused of over or under valuing these goods in order to minimize business taxes and/or import duties. A myriad of rules and regulations developed (in the case of the United States) by both the Internal Revenue Service as well as the Customs Service deal with these valuations. For the purpose of calculating the 2 export and import price indexes, however, the question we attempt to answer is, "Conceptually, what is the ideal import/export price the Bureau of Labor Statistics should be collecting in those instances where a transaction is between related parties." We demonstrate that the ideal price for incorporation into these price indexes may be very difficult to calculate, and that the selection of an alternative arms length transaction may be a more fruitful approach.
Handbook on Residential Property Price Indices, 2013
The views expressed in this Working Paper are those of the author(s) and do not necessarily repre... more The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
Handbook on Residential Property Price Indices, 2013