The Top-Down Approach 3: Aggregate Total Factor Productivity Level

In the previous chapter three time-symmetric decompositions of aggregate value-added-based total factor productivity change were developed. In this chapter a fourth decomposition will be developed. A notable difference with the previous chapter is that the development is cast in terms of levels rather than indices. Various aspects of this new decomposition will be discussed and links with decompositions found in the literature unveiled. It turns out that one can dispense with the usual neo-classical assumptions.