Consistent Estimation of the 'True' Fixed-Effects Stochastic Frontier Model

Belotti, Federico; Ilardi, Giuseppe

doi:10.2139/ssrn.2045474

Cited by 22 publications

(17 citation statements)

References 20 publications

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“…This has a critical impact on the SF analysis since an accurate estimation of inefficiency scores relies on the precision of these estimates. Belotti and Ilardi [19] show that the incidental variable problem vanishes in long panel ( ≥ 15).…”

Section: Estimation Methodsmentioning

confidence: 98%

Technical Efficiency and Technical Change in Canadian Manufacturing Industries

Gamtessa

2014

Economics Research International

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This study applies the "true fixed effects" panel stochastic frontier methodology to the Canadian KLEMS data set to estimate technical change and technical efficiency in the Canadian manufacturing sector. To account for the endogeneity of capital inputs as well as the possible problems related to omitted variables, a two-stage residual inclusion method is pursued. The first stage is estimated using the dynamic panel GMM method. The results show that Canadian manufacturing industries experienced significant declines in technical efficiencies during the last ten years. This suggests that the observed slowdown in TFP growth during the recent past is partly due to declining technical efficiency.

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Section: Estimation Methodsmentioning

confidence: 98%

Technical Efficiency and Technical Change in Canadian Manufacturing Industries

Gamtessa

2014

Economics Research International

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“…Pooled‐panel models can generate a misspecification bias in presence of unobserved time‐invariant variables (Belotti & Ilardi, ). Greene () addressed this problem with unit‐specific intercepts.…”

Section: Methodsmentioning

confidence: 99%

“…First, one has to solve the incidental parameters problem, which appears when the panel length is small compared with the number of subjects, causing inconsistent estimation. As Belotti and Ilardi () show, the dummy variable approach for estimation is only suitable when the panel length is over 10. Our sample is highly unbalanced because of the attrition of farmers and contains observations only at four points in time.…”

Section: Methodsmentioning

confidence: 99%

“…Our sample is highly unbalanced because of the attrition of farmers and contains observations only at four points in time. The common solutions to this problem are based on the elimination of the individual effects through within transformation (Belotti & Ilardi, ): For each panel

i

and the respective variables (

z_{i}

), the individual mean (

{\overset{̅}{z}}_{i}

) is subtracted from the observation in period t (

z_{it}

)

{\overset{z}{true}}_{italicit} = z_{italicit} - {\overset{z}{true}}_{i} .

…”

Section: Methodsmentioning

confidence: 99%

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How can the productivity of Indonesian cocoa farms be increased?

Tothmihaly

Ingram

2018

Agribusiness

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This study investigates the Indonesian cocoa production to reveal the possibilities for poverty alleviation. We estimate, using 1,290 panel observations from 722 households and stochastic frontier analysis, the technical efficiency of cocoa production and disaggregate productivity growth. Our results indicate that the average efficiency of the cocoa farmers is 50%. Farmers' educational attainment and their experience in cocoa farming are significant factors increasing efficiency. We also find that the productivity of

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“…In addition, the unit-specific intercepts can be inconsistently estimated in panel data characterised by large N and short observation periods, due to the incidental parameter problem (Neyman and Scott, 1948;Lancaster, 2002). In this respect, Belotti and Ilardi (2012) recently demonstrated that the inconsistency bias is negligible in samples with longer than 10 years, thus allowing the validation of our empirical strategy, which relies on the TFE model 11 . With respect to the possible modelling choice of the inefficiency term as a time variant or invariant process, considering that our dataset includes a rather long period of observations ( ), a time-varying specification seems to be the most plausible choice.…”

Section: Argues That If "A Sufficient Number Of Auxiliary Variables Tmentioning

confidence: 99%

Technology Invention and Diffusion in Residential Energy Consumption. A Stochastic Frontier Approach

Palma

2015

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract Traditional large appliances absorb a large share of residential electricity consumption and represent important targets of energy policy strategies aimed at achieving energy security. Despite being characterized by rather mature technologies, this group of appliances still offers large potential in terms of efficiency gains due to their pervasive diffusion. In this paper we analyse the electricity consumption of a set of four traditional 'white goods' in a panel of ten EU countries observed over 21 years , with the aim of disentangling the amount of technical efficiency from the overall energy saving. The technical efficiency trend is modelled through a set of technology components representing both the invention and adoption process by the means of specific patents weighted by production and bilateral import flows, which allows to overcome the rigid Stochastic Frontier framework in modelling the effect of technical change. Our results show that the derived energy demand and inefficiency trends are both related to changes in the amount of available technology embodied in energy efficient appliances. The effect is significant both in its domestic and international components and suggests an active role of innovation and trade policies for achieving efficiency targets which directly impact the amount of electricity consumed by households. Terms of use: Documents in

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Consistent Estimation of the 'True' Fixed-Effects Stochastic Frontier Model

Cited by 22 publications

References 20 publications

Technical Efficiency and Technical Change in Canadian Manufacturing Industries

Technical Efficiency and Technical Change in Canadian Manufacturing Industries

How can the productivity of Indonesian cocoa farms be increased?

Technology Invention and Diffusion in Residential Energy Consumption. A Stochastic Frontier Approach

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