Sr. Park et Jk. Kwon, RAPID ECONOMIC-GROWTH WITH INCREASING RETURNS TO SCALE AND LITTLE OR NO PRODUCTIVITY GROWTH, Review of economics and statistics, 77(2), 1995, pp. 332-351
Total factor productivities for 28 Korean manufacturing sectors were e
stimated jointly with markups, scale economies, and the capacity utili
zation rate using the short-run generalized Leontief cost function. Co
ncavity conditions necessary for the cost function to be well-behaved
and consistent with a firm's optimizing behavior were imposed on the e
stimation by way of Bayesian inference. The study finds: (a) the super
iority of the short-run equilibrium model over the long-run model and
of the short-run generalized Leontief cost function over the translog
cost function; (b) market imperfection; (c) the existence of scale eco
nomies; and (d) biases in the traditional TFP measures. The study also
suggests that a rapid growth of output is possible with negative TFP
growth.