TY  - JOUR
AU  - Diewert,W.E.
AU  - Morrison,Catherine J.
TI  - Adjusting Output and Productivity Indexes for Changes in the Terms of Trade
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1564
PY  - 1985
Y2  - February 1985
UR  - http://www.nber.org/papers/w1564
L1  - http://www.nber.org/papers/w1564.pdf
N1  - Author contact info:
W. Erwin Diewert
Department of Economics
University of British Columbia
#997-1873 East Mall
Vancouver, BC  V6T 1Z1
CANADA
Tel: 604/822-2544
Fax: 604/822-5915
E-Mail: diewert@econ.ubc.ca

Catherine J. Morrison
Department of Agricultural Economics
UC, Davis
Davis, CA  95616
Tel: 617/381-3560
E-Mail: no email available
AB  - 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.
ER  -