NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Adjusting Output and Productivity Indexes for Changes in the Terms of Trade

W.E. Diewert, Catherine J. Morrison

NBER Working Paper No. 1564
Issued in February 1985
NBER Program(s):   PR

In this paper we employ index number theory in addressing the problem of adjusting real national income and real domestic product for changes in a country's terms of trade. More specifically, using recent developments in the theory of production, we address the problems related to measuring: (i) real output produced and real input utilized by the private business sector;(ii) productivity growth or technical change; (iii) the effects on domestic real output of changes in the terms of trade; and (iv) the impact on final sales to domestic purchasers of changes in the balance of payments deficit, in a consistent accounting framework.This treatment of international trade allows us to undertake comparative statics analyses using only production theory, whereas in the traditional paradigm which treats traded goods as perfectly substitutable with a class of domestic goods, a general equilibrium framework is required. We illustrate our suggested solutions using U.S. data for the years 1968-82.

download in pdf format
   (585 K)

download in djvu format
   (398 K)

email paper

This paper is available as PDF (585 K) or DjVu (398 K) (Download viewer) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w1564

Published: Diewert, W. Erwin and Catherine J. Morrison. "Adjusting Output and Productivity Indexes for Changes in the Terms of Trade," Economic Journal, Vol. 94, No. 3, Sept. 1986, pp. 659-679.

Users who downloaded this paper also downloaded these:
De Gregorio and Wolf w4807 Terms of Trade, Productivity, and the Real Exchange Rate
Morrison and Diewert Productivity Growth and Changes in the Terms of Trade in Japan and the United States
Backus, Kehoe, and Kydland w4242 Dynamics of the Trade Balance and the Terms of Trade: The S-Curve
Feenstra, Mandel, Reinsdorf, and Slaughter w15592 Effects of Terms of Trade Gains and Tariff Changes on the Measurement of U.S. Productivity Growth
Kehoe and Ruhl w13111 Are Shocks to the Terms of Trade Shocks to Productivity?
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us