The influence of inflation on productivity calculations: A case study

Abstract

This paper reports on an investigation which examined the effect of calculations made in fixed and current prices on the total productivity and partial productivities of a company manufacturing hardware fittings. The Craig and Harris productivity measurement model was used, and the calculations were based on 14 data sets collected on an annual basis over a reference period from 1971 to 1984. The collection of input and output data for use in the various models to measure productivity at the company level is not an easy task, it is made more difficult when deflator factors are employed and this may be one of the reasons for the opposition which some company managements appear to have to productivity measurement. The results from this piece of work indicate that total productivity and the partial productivities of capital, labour, material and miscellaneous are similar when calculated using fixed prices and current prices.