Total Factor Productivity Calculator

Total Factor Productivity Calculator calculator can be used to measure the efficiency of production by comparing output to inputs.

Input Parameters

Calculation Results

Calculation Formula

TFP = Output / (λ * Labor + μ * Capital)

Where:
TFP: Total Factor Productivity
Output: Gross Domestic Product (GDP)
Labor: Hours Worked
Capital: Investment
λ and μ: Weights for Labor and Capital respectively

Total Factor Productivity Calculator Calculator Usage Guide

Learn how to use the Total Factor Productivity Calculator calculator and its working principles

How to Use the Calculator

  1. Enter the Gross Domestic Product (GDP) in the first input field.
  2. Enter the total hours worked in the second input field.
  3. Enter the total investment in capital in the third input field.
  4. Click the "Calculate" button to compute the Total Factor Productivity (TFP).
  5. The result will be displayed in the TFP field.

Understanding the Formula

The TFP is calculated by dividing the output (GDP) by a weighted average of inputs (labor and capital). The weights (λ and μ) are typically set to 0.5 for simplicity, but can be adjusted based on specific economic models.

Practical Applications

TFP is a key indicator of economic efficiency and productivity. It helps in understanding how well an economy is using its resources. A higher TFP indicates more efficient use of resources and better economic performance.