MEASUREMENT OF TOTAL FACTOR INPUT, TECHNICAL CHANGE AND OUTPUT BY INDUSTRY IN THE FEDERAL REPUBLIC OF GERMANY 1958–1968

This paper deals with some results of an extended investigation which was carried out by the German Institute of Economic Research, Berlin, and the Ifo-Institute, Munich, and financed by the Stiftung Volkswagenwerk. For 29 sectors of manufacturing Cobb-Douglas production functions have been calculated, based on quarterly figures 1958–1968 of value added, input of hours worked, input of utilized capital stock (net of scrappage), and of potential value added, potential labor input and total capital stock. The income distribution is used as production elasticities. For each of the 29 sectors 12 time series of quarterly indices of total factor input and technical change have been computed, using utilized data (variation 1-6) and capacity data (variation 7-12). Two different time series of α are used, taking quarterly interpolated data (variation 1, 3, 5, 7, 9, 11) and the geometric mean 1958–1968 (variation 2, 4, 6, 8, 10, 12). Moreover three different parameters of homogeneity are introduced, taking r= 1 (variation 1, 2, 7, 8), r= 1.1 (variation 3, 4, 9, 10) and r= 1.25 (variation 5, 6, 11, 12). Seven of the 29 sectors show a very high sensitivity of the rate of technical change due to the assumed r, six sectors a rather high sensitivity. Ten of the 29 sectors show a rather small sensitivity of technical change due to the assumed r, six sectors a very small or even negative sensitivity, i.e. an increasing r creates an increasing technical change. These results can be explained by taking account of the fact that total factor input in many branches increased very slowly or even decreased (labor input alone decreased in nearly all branches). A hierarchy of technical change has been calculated; this hierarchy is difficult to explain, because fast growing industries as well as industries with a small or a negative growth rate of output rank in both the leading and the last group of technical change. Very high rates of output result in high rates of technical change (chemicals, mineral oil refining, plastics manufactures), but some industries with a rather small growth of output (shipbuilding, fine ceramics, steel drawing, and cold rolling mills) show a high rate of technical change too.     

THE SIZE OF HOUSEHOLD PRODUCTION: METHODOLOGICAL PROBLEMS AND ESTIMATES FOR THE FEDERAL REPUBLIC OF GERMANY IN THE PERIOD 1964 TO 19801

Household production as well as other informal economic activities have received scant attention in economic science. In the last decade the view has been taken that there has been a big shift from formal to informal production. In order to examine this trend this article presents estimates for the size of household production for the Federal Republic of Germany which are based on time-budget data collected from 1964 to 1980. To show the sensitivity of the results two different estimating methods the Opportunity Cost Method and the Market Cost Method, are used. Since productivity growth took place not only in the formal economy but also in household production, estimates will be presented which take productivity growth explicitly into account. The article concludes with a comparison of estimates for other countries.     

NATIONAL PRODUCT AT CONSTANT PRICES IN THE FEDERAL REPUBLIC OF GERMANY

With few exceptions, only cormmodity flows and values which can be determined by means of commodity flows (flows of goods and services) are calculated in constant prices in the official national accounts of the Federal Republic of Germany. Figures an the industrial origin and the final use of the national product are published, the former according to thirty industries, the latter according to the major types of uses of which in particular private consumption expenditure has been further analysed. The computations at constant prices are based on market prices and not on factor costs. It is only on this basis that a uniform valuation of the production and the expenditure side can be made since the turnover tax, which is the most important indirect tax, is contained in the elements of final demand in varying shares and cannot be eliminated (the tax is part of the price and has cumulative effect). The computation at constant prices presupposes a breakdown of the values in current prices according to quantities and prices. This raises a number of problems, e.g. because seller and buyer may consider differing aspects-production costs, technical attributes, etc., on the one hand, and use etc., on the other hand. In part there exist only vague ideas, or no ideas at all, as to what is to be considered-from a theoretical point of view-as quantity and price. In other cases the two values can only with great difficulties, if at all, be quantified, or there exists no market price and only the production costs are available. The author deals in greater detail with differences in quality and new commodities, the determination and treatment of quantities and prices for services, in particular for trade services (services attached to goods), the computation of government services at constant prices considering the development of productivity in public service, the determination of the values calculated as balances, above all the treatment of changes in the terms of trade for net exports of goods and services, the computation of the contributions of industries to the gross domestic product and, finally, the reconciliation of the production and the expenditure side. In a third section the author deals with index formulae and the base year. In the majority of cases values are deflated; partly, however, they are currently adjusted by means of volume and quantity data. On the production side the two methods are in part combined. In a concluding section a survey is provided of the computation methods used in the Federal Republic of Germany and on the available material for the computations. Mention is made of depreciation at constant prices.     

ESTIMATES OF CAPITAL STOCK BY INDUSTRIES IN THE FEDERAL REPUBLIC OF GERMANY

The main purpose of this paper is to discuss some of the measurement problems in connection with the perpetual inventory method applied for estimates of capital stock. In the Federal Republic of Germany, highly aggregated capital stock data by business sector are compiled by the Federal Statistical Office within its national accounts calculations, while more detailed capital stock estimates by industrial sectors are published by the German Institute of Economic Research (DIW) in Berlin. Because of various gaps in the statistical sources, the accuracy of the capital stock calculations is not yet entirely satisfactory. Aside from the problem of establishing long time series for gross fixed capital formation in constant prices for all sectors, it is difficult to obtain reliable data on the inter-sectoral transactions in secondhand capital goods. In addition, there are problems of determining price indices and service life distributions of the fixed assets in the various parts of the economy. This paper shows a way to arrive at a reasonably close approximation to the latter problem.     

INFLATION ACCOUNTING FOR THE FEDERAL REPUBLIC OF GERMANY RESULTS USING DIFFERENT DEFLATOR PRICE INDICES

The purpose of inflation accounting as proposed by Jack Hibbert¹ is to show the changes in purchasing power of the assets and liabilities by sectors resulting from general price movements. This paper shows the results of inflation accounting for the Federal Republic of Germany on the basis of complete balance sheets for the sectors "Private households,""Enterprises,""General government" and "Rest of the world" in 1980. It is evident that the results of inflation accounting depend to a high degree on the kind of price index which is used as an indicator of the changes in the purchasing power of money in general. The price index for inflation accounting should in general be selected according to the aim of the analysis. On the other hand, however, the validity of the results of inflation accounting depends on and is limited by the price index chosen for that purpose. The figures presented also show that the results of inflation accounting depend to a high degree on whether estimates of the value of tangible assets are included or not. This holds for reproducible tangible assets as well as for land.     

SIZE OF THE PUBLIC SECTOR,ECONOMIC GROWTH AND THE INFORMAL ECONOMY: DEVELOPMENT TRENDS IN THE FEDERAL REPUBLIC OF GERMANY*

The growth of the public sector in the post-war period and the consequences of this development for economic growth is a strongly disputed subject of economic theory and policy. In this paper the development trends of state activities in the case of the Federal Republic of Germany are presented. The structure of public expenditures as well as the tax structure are taken into consideration and possible impacts on real economic growth are analysed. The negative correlations between some kinds of public expenditures (or taxes) and the growth rate of real GNP should not be taken in proof of the growth-retarding effects which might ensue from increasing state activities. It seems to be more likely that state activities have induced shifts of resources from the formal into the informal economy. Politicians should be aware that some measures of economic policy conventionally proposed will strengthen the movement into the informal economy, thus intensifying the current problems within the public budgets as well as in the social security system.     

ARE COLLECTIVE ECONOMY UNDERTAKINGS INTEGRATED INTO THE CONCEPT OF ECONOMIC AND SOCIAL POLICY IN THE FEDERAL REPUBLIC OF GERMANY? A POSTSCRIPT*

I. The concept of economic and social policy in the Federal Republic of Germany. II. Public undertakings: conditionally recognized. III. Co-operatives: integrated. IV. Trade union undertakings: disputed. V. German collective economy: a creation of theory, not a political reality.     

GENERATING INTERNATIONALLY COMPARABLE INCOME DISTRIBUTION DATA: EVIDENCE FROM THE FEDERAL REPUBLIC OF GERMANY (1974), MEXICO (1968) AND THE UNITED KINGDOM (1979).

In this article an attempt is made to generate internationally comparable income distribution data for the Federal Republic of Germany (1974), Mexico (1968) and the United Kingdom (1979). To that end, the same income concept and income unit were adopted for each country, i.e. respectively household available income and the household. Moreover, incomes from various sources were adjusted for inconsistency with National Accounts according to Altimir's methodology. The paper finds that the distribution of persons by household income per equivalent unit is probably the best way of looking at the distribution of economic welfare. It further demonstrates that the distribution of persons by household available income per capita is much closer to this 'ideal' distribution than the distribution of households by household available income. Finally, the paper discusses some of the problems arising from the fact that one normally works with grouped data. It is found that in the case of the three countries under study, grouping is likely to have had only a small impact on the results.     

NATIONAL ACCOUNTS AS AN INSTRUMENT FOR THE ANALYSIS OF THE SOURCES OF STAGFLATION AN EXAMPLE: FRANCE AND GERMANY, 1971–79

Stagflation is a combination of an increasing rate of inflation with a decreasing rate of real growth. It appears when the inflationary gap of production costs raises faster than the inflationary gap of expenditures on Gross Domestic Marketable Product. The decomposition of these two gaps into their main elements gives then the possibility of determining the sources of the inflationary increase in costs and the causes of the relative retardation of the inflationary increase in expenditures. The main cause of stagflation in 1974 for France and Germany was the huge rise in oil prices which had not been immediately followed by an equal rise in prices of their exports. The inflationary rise in wages is an almost permanent factor of stagflation in France; in Germany its responsibility is involved only before 1975. In France the insufficient increase in the inflationary gap of expenditures was mainly due to the restrictive monetary policy and to the official price regulation. In Germany the restrictive monetary policy also contributed to the slowdown in demand in 1974 and 1975. In 1977, on the contrary, the main cause of stagflation was the slackening of export demands due to the world recession and the revaluation of the DM.