Emissions-Adjusted Total Factor Productivity
Overview
Paper Summary
This research proposes "Emissions-Adjusted Total Factor Productivity" (TFPE), which accounts for pollution's long-term damage. The analysis finds that the U.S. experienced steadier TFPE growth since 2005 compared to traditional measures, especially when using high estimates of carbon's social cost, due to declining emissions. The findings also highlight that while many advanced economies experienced similar TFPE trends, some developing nations experienced stark decreases.
Explain Like I'm Five
This research introduces a way to measure economic productivity that accounts for the long-term effects of pollution. It suggests that by lowering carbon emissions, countries might appear more productive than they currently do with standard measures.
Possible Conflicts of Interest
The authors acknowledge financial support from the Structural Transformation and Growth (STEG) research initiative. No other conflicts are readily apparent.
Identified Limitations
Rating Explanation
This paper presents a novel and relevant approach to measuring productivity by incorporating climate damages. The methodology is sound and builds on established economic theory. The use of readily available data and the explicit consideration of different social cost of carbon estimates make the results transparent and robust. However, limitations related to the social cost of carbon estimates, simplified emission measures, and scope call for further research.
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