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Estimating efficiency effects in a panel data stochastic frontier model

Publication Type : Journal Article

Thematic Areas : Amrita Center for Economics and Governance (ACEG)

Publisher : Journal of Productivity Analysis (2019)

Source : Journal of Productivity Analysis (2019)

Url :

Campus : Amritapuri

School : School of Business

Center : Amrita Center for Economics & Governance (ACEG)

Department : Department of Management, Economics & Governance

Year : 2019

Abstract : This paper proposes a panel data based stochastic frontier model which accommodates time-invariant unobserved heterogeneity along with efficiency effects. The efficiency effects are specified by a standard normal cumulative distribution function of exogenous variables which ensures the efficiency scores to lie in a unit interval. The model is within-transformed and then estimated with non-linear least squares. The finite sample properties of the proposed estimator are investigated through a set of Monte Carlo experiments. The experiments suggest that our estimation procedure generally performs well also in small samples. Finally, an empirical illustration based on widely used panel data on Indian farmers reveals the simplicity and easy applicability of the model.

Cite this Research Publication : Dr. Satya Paul and Shankar, S., “Estimating efficiency effects in a panel data stochastic frontier model”, Journal of Productivity Analysis, 2019.

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