ABSTRACT
The objective of this chapter is to extend the single period technical efficiency measurement to include a time dimension. This is achieved through the construction of parametric and nonparametric TFP indices, which are explained in some detail, by examining the separate components and then compared to ensure that the results are consistent. There are no statistical tests in the index number approach, to ensure validity of the results, so the econometric testing of the data in the last chapter is an important unpinning for this section. The next chapter extends the analysis by separating the change in technical efficiency for each firm from shifts in the frontier itself. This is an important distinction since if the frontier shifts because of a change in the available technology, there is productivity growth and not simply an increase in technical efficiency.
