A General Index of Technical Change
01 Feb 1988-Journal of Political Economy (The University of Chicago Press)-Vol. 96, Iss: 1, pp 20-41
TL;DR: In this article, a procedure for estimating a general index of technical change within the context of a quite general production technology is presented, when panel data are available for firms in an industry, time-specific dummies can be combined in a nonlinear estimation procedure.
Abstract: This paper outlines a procedure for estimating a general index of technical change within the context of a quite general production technology. Specifically, when panel data are available for firms in an industry, time-specific dummies can be combined in a nonlinear estimation procedure to yield a general index of technical change that may be both nonneutral and scale augmenting. This approach offers numerous advantages over the traditional time trend representation of technical change. For example, the general index can serve as the basis for analysis of the determinants of technical change. Results for a sample of 30 electric utilities over the period 1951-78 show that the productivity decline of the 1970s can be attributed primarily to sulphur oxide restrictions and secularly declining capacity utilization due to rapidly increasing peak-load demands.
Citations
More filters
Book•
01 Sep 1996
TL;DR: In this paper, the authors extend the established literature on modelling the cost characteristics of banking markets by applying the flexible Fourier functional form and stochastic cost frontier methodologies to estimate scale economies, X-inefficiencies and technical change for a large sample of European banks between 1989 and 1997.
Abstract: This paper extends the established literature on modelling the cost characteristics of banking markets by applying the flexible Fourier functional form and stochastic cost frontier methodologies to estimate scale economies, X-inefficiencies and technical change for a large sample of European banks between 1989 and 1997. The results reveal that scale economies are widespread for smallest banks and those in the ECU 1 billion to ECU 5 billion assets size range. Typically, scale economies are found to range between 5% and 7%, while X-inefficiency measures appear to be much larger, between 20% and 25%. X-inefficiencies also appear to vary to a greater extent across different markets, bank sizes and over time. This suggests that banks of all sizes can obtain greater cost savings through reducing managerial and other inefficiencies. This paper also shows that technical progress has had a similar influence across European banking markets between 1989 and 1997, reducing total costs by around 3% per annum. The impact of technical progress in reducing bank costs is also shown to systematically increase with bank size. Overall, these results indicate that Europe's largest banks benefit most from technical progress although they do not appear to have scale economy advantages over their smaller counterparts.
764 citations
TL;DR: In this paper, the authors examined the productive efficiency of 70 Indian commercial banks during the early stages (1986-1991) of the ongoing period of liberalization and used data envelopment analysis to calculate radial technical efficiency scores.
750 citations
TL;DR: In this paper, the authors use a variety of approaches to model cost and profit inefficiencies as well as technical change for different ownership types in the German banking market and find little evidence to suggest that privately owned banks are more efficient than their mutual and public-sector counterparts.
Abstract: Agency issues associated with different types of firm ownership are an area of concern in many banking systems where state-owned banks operate alongside mutual and private-sector institutions. This paper uses a variety of approaches to model cost and profit inefficiencies as well as technical change for different ownership types in the German banking market. We find little evidence to suggest that privately owned banks are more efficient than their mutual and public-sector counterparts. While all three bank ownership types benefit from widespread economies of scale, inefficiency measures indicate that public and mutual banks have slight cost and profit advantages over their private sector competitors.
621 citations
Cites background or methods from "A General Index of Technical Change..."
...efficiency is better studied and modeled with panels (see Baltagi and Griffin, 1988; Cornwell,...
[...]
...We use the panel data approach because technical efficiency is better studied and modeled with panels (see Baltagi and Griffin, 1988; Cornwell, Schmidt and Sickles, 1990; Kumbhakar, 1993)....
[...]
...…iij j=1 3 =1i ij j=1=1i i =1ii=1i ZZbZZaZbZa TP+Q= Q TC = ++SE j µµ ρδα τ (6) organisational changes allowing for the more efficient use of existing inputs, together with the effects of other factors, such as changing environmental regulations (see Baltagi and Griffin, 1988; Nelson, 1984)....
[...]
TL;DR: In this paper, the authors investigated the impact of risk and quality factors on banks' cost by using the stochastic cost frontier methodology to evaluate scale and X-inefficiencies, as well as technical change for a sample of Japanese commercial banks between 1993 and 1996.
Abstract: This paper investigates the impact of risk and quality factors on banks’ cost by using the stochastic cost frontier methodology to evaluate scale and X-inefficiencies, as well as technical change for a sample of Japanese commercial banks between 1993 and 1996. Loan-loss provisions are included in the cost frontier model to control for output quality, with a financial capital and a liquidity ratio included to control risk. Following the approach suggested in Mester (1996) we show that if risk and quality factors are not taken into account optimal bank size tends to be overstated. That is, optimal bank size is considerably smaller when risk and quality factors are taken into account when modelling the cost characteristics of Japanese banks. We also find that the level of financial capital has the biggest influence on the scale efficiency estimates. X-inefficiency estimates, in contrast, appear less sensitive to risk and quality factors. Our results also suggest that scale inefficiencies dominate X-inefficiencies. These are important findings because they contrast with the results of previous studies on Japanese banking. In particular, the results indicate an alternative policy prescription, namely, that the largest banks should shrink to benefit from scale advantages. It also seems that financial capital has the largest influence on optimal bank size.
494 citations
Cites background from "A General Index of Technical Change..."
...2 See Bauer (1990) for an excellent review of the frontier literature and how dierent stochastic assumptions can be made....
[...]
TL;DR: In this paper, the authors report on developments in theoretical and empirical understanding of the macroeconomic consequences of oil price shocks since 1996, when the U.S. Department of Energy sponsored a workshop summarizing the state of understanding.
Abstract: This paper reports on developments in theoretical and empirical understanding of the macroeconomic consequences of oil price shocks since 1996, when the U.S. Department of Energy sponsored a workshop summarizing the state of understanding of the subject. Four major insights stand out. First, theoretical and empirical analyses point to intra- and intersectoral reallocations in response to shocks, generating asymmetric impacts for oil price increases and decreases. Second, the division of responsibility for post-oil-price shock recessions between monetary policy and oil price shocks, has leaned heavily toward oil price shocks. Third, parametric statistical techniques have identified a stable, nonlinear, relationship between oil price shocks and GDPfrom the late 1940s through the third quarter of 2001. Fourth, the magnitude of effect of an oil price shock on GDP, derived from impulse response functions of oil price shocks in the GDP equation of a VAR, is around -0.05 and -0.06 as an elasticity, spread over two years, where the shock threshold is a price change exceeding a three-year high.
492 citations
References
More filters
TL;DR: In this article, the authors proposed a method to improve the performance of the system by using the information of the user's interaction with the system and the system itself, including the interaction between the two parties.
Abstract: В статье производится анализ агрегированной производственной функции, вводится аппарат, позволяющий различать движение вдоль такой функции от ее сдвигов. На основании сделанных в статье предположений делаются выводы о характере технического прогресса и технологических изменений. Существенное внимание уделяется вариантам применения концепции агрегированной производственной функции.
10,850 citations
3,500 citations
TL;DR: Ebsco as mentioned in this paper focuses on additive and homogeneous production possibility frontiers that have played an important role in formulating statistical tests of the theory of production and characterizes the class of production possibility frontier that are homogeneous and additive.
Abstract: Focuses on additive and homogeneous production possibility frontiers that have played an important role in formulating statistical tests of the theory of production. Characterization of the class of production possibility frontiers that are homogenous and additive; Representation of the production possibility frontier; Statistical tests of the theory of production. (Из Ebsco)
2,619 citations
2,351 citations
TL;DR: In this paper, the authors rationalize certain functional forms of index numbers with functional forms for the underlying aggregator function, and show that a certain family of index number formulae is exact for the "flexible" quadratic mean of order r aggregator functions.
2,273 citations