Effects of Inputs of a Firm on TFP

Abstract

Purpose: We approach here the question of dynamical behavior of Total Factor Productivity (Hence TFP) and inputs of firms by constructing theoretical relations of economic parameters that considers economic growth. Results: This article develops a relationship of TFP and its dependent variables; a partial differential equation of TFP is established here and a set of relations of inputs are considered also. A recurrence relation and a second order differential equation of inputs are established here. Limitations: It is not proper setting to study TFP and inputs of a firm fully since all the parameters are not considered here. Contribution: The dynamical behavior of TFP and inputs of a firm found in this paper suggest that policymakers should seriously consider the investment, embodied technology and other factors of TFP for better business policy. The study of inputs focuses the additional valuable guidelines for policy reforms by establishing various relations between inputs and different economic parameters