King, M; Nayak, S (2025) A macroeconomic model with imperfect production processes and conformance testing. NPL Report. IEA 27

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Abstract

This study shows how the contribution of conformance testing can be included in a macroeconomic model where the production process sometimes generates defective outputs. Specifically, this study adapts the Solow model by making the economy’s Total Factor Productivity (TFP) a function of the effort committed by engineers to conformance testing. Although, this study takes a theory-based approach, the resulting model can be operationalised using plausible estimates of the key parameters. The aim is thereby to provide theoretical underpinnings for the conformance testing aspects of the national quality infrastructure. Furthermore, the model can be used for a benefit-cost analysis of the National Measurement System (NMS) programme, which is responsible for maintaining the UK’s measurement infrastructure. Finally, this model will really come into its own once there are updated estimates of the core parameters from a forthcoming NMS survey.

Item Type:	Report/Guide (NPL Report)
NPL Report No.:	IEA 27
Divisions:	Strategy Directorate
Identification number/DOI:	10.47120/npl.IEA27
Last Modified:	05 Mar 2025 10:39
URI:	https://eprintspublications.npl.co.uk/id/eprint/10127