ESTIMATING TOTAL FACTOR PRODUCTIVITY IN THE ROMANIAN ECONOMY*

This paper analyses the dynamics of the Romanian economy in the 1990-2002 period, both on aggregate terms and using a sectoral decomposition. We worked in a neoclassical framework using a standard Cobb Douglas function with a Hicks neutral technology. We decomposed the economy into four sectors in terms of gross added value and analyzed the output dynamics in each sector. (*This paper was prepared for the international workshop within the program “Improvement of Economic Policy through Think Tank Partnership”, held in Bucharest, Romania, on October 27-29, 2003, as an additional research to a grant by the U.S. Agency for International Development for the project “Mechanisms of Long-term Growth in the Economies in Transition (Cases of Russia and Romania)”. The research partners of this project are Global Insight (former DRI-WEFA – USA), the Institute of Economic Forecasting (Romania) and the Center for Macroeconomic Analysis and Short-term Economic Forecasting (Russian Federation). The opinions, findings and conclusions or recommendations expressed herein are those of the author and do not necessarily reflect the views of the U.S. Agency for International Development).