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Notes: Intermediate Inputs and the Estimation of Technical Change: The Lumber and Wood Products Industry

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Previous studies estimating the rate of technical change in the forest products industries have assumed an industry production function in which output is measured as value-added. In the value-added model, intermediate inputs--such as stumpage and energy--are not treated symmetrically with capital and labor inputs. The value-added model places unnecessary restrictions on the production process and producer behavior, and rules out changes in the forest resource and other intermediate inputs as a source of technical change. This note examines the measurement of technical change in the U.S. lumber and wood products industry by empirically comparing the value-added model of production with a gross output model that explicitly includes intermediate inputs in the production process. It is shown that the rates of technical change estimated from the two models diverge sharply. Implications for future research are discussed in a concluding section. Forest Sci. 32:1078-1085.

Keywords: Value-added; gross output; production function

Document Type: Miscellaneous

Affiliations: Economist, USDA Forest Service, Policy Analysis Staff, P.O. Box 2417, Washington, DC 20013

Publication date: December 1, 1986

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