Using a sample of 20 developing Asian countries, this study analyzes how general price
level affects output per worker through the channels of capital output ratio and total
factor productivity (TFP). The main finding is that increase in general price level promotes
capital accumulation but results in loss of TFP. The study concludes that increasing general
price level distorts relative price signal and, hence results in inefficiency in resource
allocation. The study also finds that increase in government expenditure adversely affects
output mainly through the channel of TFP. Furthermore, the potential benefits of trade
openness on output through increased competition are mostly offset by the harmful
effects of increased competition on certain domestic industries. It is also observed that
economic growth is the main factor through which overall productivity can be improved.
Fatima Bibi, Tahir Mahmood, Muhammad Jamil, Eatzaz Ahmad. (2017) The Effect of Price Level on output Per Worker: Evidence from Asian Developing Countries, , Volume-11, Issue-1.
