Fixed-effect estimation of technical efficiency with time-invariant dummies

Qu Feng; William C. Horrace

doi:10.1016/j.econlet.2006.10.013

Fixed-effect estimation of technical efficiency with time-invariant dummies

Qu Feng, William C. Horrace

Department of Economics

Research output: Contribution to journal › Article › peer-review

5 Scopus citations

Abstract

"Within" estimation of the fixed-effect stochastic frontier model does not identify parameters on time-invariant explanatory variables. If time-invariant variables are important production inputs, then standard efficiency estimates are biased. This note details bias correction, when time-invariant inputs are dummy variables.

Original language	English (US)
Pages (from-to)	247-252
Number of pages	6
Journal	Economics Letters
Volume	95
Issue number	2
DOIs	https://doi.org/10.1016/j.econlet.2006.10.013
State	Published - May 2007

Keywords

Bias
Stochastic frontier
Technical efficiency

ASJC Scopus subject areas

Finance
Economics and Econometrics

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10.1016/j.econlet.2006.10.013

Cite this

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title = "Fixed-effect estimation of technical efficiency with time-invariant dummies",

abstract = "{"}Within{"} estimation of the fixed-effect stochastic frontier model does not identify parameters on time-invariant explanatory variables. If time-invariant variables are important production inputs, then standard efficiency estimates are biased. This note details bias correction, when time-invariant inputs are dummy variables.",

keywords = "Bias, Stochastic frontier, Technical efficiency",

author = "Qu Feng and Horrace, {William C.}",

year = "2007",

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AU - Feng, Qu

AU - Horrace, William C.

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AB - "Within" estimation of the fixed-effect stochastic frontier model does not identify parameters on time-invariant explanatory variables. If time-invariant variables are important production inputs, then standard efficiency estimates are biased. This note details bias correction, when time-invariant inputs are dummy variables.

KW - Bias

KW - Stochastic frontier

KW - Technical efficiency

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SP - 247

EP - 252

JO - Economics Letters

JF - Economics Letters

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ER -

Fixed-effect estimation of technical efficiency with time-invariant dummies

Abstract

Keywords

ASJC Scopus subject areas

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