ERRORS OF MEASUREMENT AND THE RECENT ACCELERATION IN MANUFACTURING PRODUCTIVITY GROWTH

Using detailed (4-digit SIG) industry data for the years 1958-1989, I examine whether the recent acceleration in manufacturing productivity can be attributed to the effects of mismeasurement of the prices of in puts and output, by testing a model linking a set of proxy variables f or measurement error to a series of measures of acceleration in total factor productivity (TFP). Alternative TFP estimates are presented in order to determine if the findings are sensitive to the method of TFP calculation. The results are inconsistent with the measurement error h ypothesis and invariant to the specification of the TFP equation.