Working Paper: NBER ID: w4812
Authors: W. Erwin Diewert; Ann Marie Smith
Abstract: The paper derives a consistent accounting framework for the treatment of inventories when measuring the productivity of a distribution firm. The average purchase price of an inventory item during an accounting period must be distinguished from its average selling price and these two average prices should be distinguished from the corresponding balance sheet prices. The accounting framework is implemented for a distribution firm which sold 76,000 separate items. The firm achieved a 9.6 percent per quarter total factor productivity growth rate over 6 quarters.
Keywords: productivity measurement; distribution firm; accounting framework; inventories
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| treatment of inventories (G31) | productivity measurement (D20) |
| accounting for inventories (M41) | accurate productivity measurements (D20) |
| accounting framework (M41) | productivity gains (O49) |