Stochastic frontier analysis using Stata

doi:10.1177/1536867X1301300404

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Stochastic frontier analysis using Stata

Journal Article•DOI•

Stochastic frontier analysis using Stata

Federico Belotti¹, Silvio Daidone², Giuseppe Ilardi, Vincenzo Atella¹•Institutions (2)

University of Rome Tor Vergata¹, University of York²

01 Dec 2013-Stata Journal (SAGE PublicationsSage CA: Los Angeles, CA)-Vol. 13, Iss: 4, pp 719-758

TL;DR: The sfcross and sfpanel commands as discussed by the authors extend the official frontier capabilities by including additional models (Greene 2003; Wang 2002) and command functionality, such as the possibility to manage complex survey data characteristics.

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Abstract: This paper describes sfcross and sfpanel, two new Stata commands for the estimation of cross-sectional and panel data stochastic frontier models. sfcross extends the official frontier capabilities by including additional models (Greene 2003; Wang 2002) and command functionality, such as the possibility to manage complex survey data characteristics. Similarly, sfpanel allows to estimate a much wider range of time-varying inefficiency models compared to the official xtfrontier command including, among the others, the Cornwell et al. (1990) and Lee and Schmidt (1993) models, the exible model of Kumbhakar (1990), the inefficiency effects model of Battese and Coelli (1995) and the "true" fixed and random-effects models developed by Greene (2005a). A brief overview of the stochastic frontier literature and a description of the two commands and their options are given, and illustrations using simulated and real data are provided.

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Journal Article•DOI•

Impact of land ownership on productivity and efficiency of rice farmers: The case of the Philippines

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Krishna H. Koirala¹, Ashok K. Mishra², Samarendu Mohanty³•Institutions (3)

Louisiana State University¹, Arizona State University², International Rice Research Institute³

01 Jan 2016-Land Use Policy

TL;DR: In this paper, the authors investigated the impact of land ownership on the productivity and technical efficiency of rice farmers in the Philippines and found that land ownership has a significant impact on technical efficiency.

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106 citations

Journal Article•DOI•

Understanding Countries’ Tax Effort

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Ricardo Fenochietto¹, Carola Pessino²•Institutions (2)

International Monetary Fund¹, CEMA²

26 Nov 2013-Social Science Research Network

TL;DR: In this paper, the authors presented a model to determine the tax effort and tax capacity of 113 countries and the main variables on which they depend, including the level of development, trade, education, inflation, income distribution, corruption, and ease of tax collection.

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Abstract: This paper presents a model to determine the tax effort and tax capacity of 113 countries and the main variables on which they depend The results and the model allow a clear determination of which countries are near their tax capacity and which are some way from it, and therefore, could increase their tax revenue This paper also determines central factors on which tax capacity depends: the level of development, trade, education, inflation, income distribution, corruption, and the ease of tax collection

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75 citations

Journal Article•DOI•

Handling Endogeneity in Stochastic Frontier Analysis

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Mustafa Karakaplan¹, Levent Kutlu²•Institutions (2)

Georgetown University¹, Georgia Institute of Technology²

25 Sep 2015-Social Science Research Network

TL;DR: This work presents a general maximum likelihood based framework to handle the endogeneity problem in the stochastic frontier models and shows that the estimator outperforms standard estimators that ignore endogeneity.

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Abstract: We present a general maximum likelihood based framework to handle the endogeneity problem in the stochastic frontier models We implement Monte Carlo experiments to analyze the performance of our estimator Our findings show that our estimator outperforms standard estimators that ignore endogeneity

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70 citations

Journal Article•DOI•

Exploring the drivers of port efficiency in Latin America and the Caribbean

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Tomás Serebrisky¹, Javier Morales Sarriera¹, Ancor Suárez-Alemán¹, Gonzalo Araya², Cecilia Briceno-Garmendia², Jordan Schwartz² - Show less +2 more•Institutions (2)

Inter-American Development Bank¹, World Bank²

01 Jan 2016-Transport Policy

TL;DR: In this paper, the authors developed a technical efficiency analysis of container ports in Latin America and the Caribbean using an input-oriented stochastic frontier model and employed a 10-year panel with data on container throughput, port terminal area, berth length, and number of available cranes in 63 ports.

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65 citations

Journal Article•DOI•

Grade inflation in UK higher education

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Raymond Bachan¹•Institutions (1)

University of Brighton¹

03 Aug 2017-Studies in Higher Education

TL;DR: In this article, the authors examined the continual increase in the proportion of "good" honour degrees awarded by UK universities since the mid-2000s and found evidence of grade inflation in UK higher education from 2009 onwards.

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Abstract: This paper examines the continual increase in the proportion of ‘good’ honour degrees awarded by UK universities since the mid-2000s. This trend has brought with it the charge of ‘grade inflation’ that may reflect falling standards in UK higher education. This issue has been raised in the national press and in government which brings into question the usefulness of the current degree classification system. Using a stochastic frontier strategy and university-wide data, we find evidence of grade inflation in UK higher education from 2009 onwards after controlling for changes in university efficiency in improving degree outcome and factors associated with degree performance. The data employed allow several other sub-themes to be explored. We confirm the findings from previous research that a student's pre-entry A-level score, region of domicile and previous schooling impact on degree performance. This paper contributes to the relatively thin UK literature that exists on ‘grade inflation’.

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63 citations

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References

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Journal Article•DOI•

Formulation and estimation of stochastic frontier production function models

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Dennis J. Aigner¹, Dennis J. Aigner², C. A. Knox Lovell³, Peter Schmidt³•Institutions (3)

University of Southern California¹, University of Wisconsin-Madison², University of North Carolina at Chapel Hill³

01 Jul 1977-Journal of Econometrics

TL;DR: In this paper, the authors define the disturbance term as the sum of symmetric normal and (negative) half-normal random variables, and consider various aspects of maximum-likelihood estimation for the coefficients of a production function with an additive disturbance term of this sort.

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8,058 citations

Journal Article•DOI•

Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error

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Wim Meeusen, Julien van Den Broeck

01 Jun 1977-International Economic Review

6,067 citations

Journal Article•DOI•

A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data

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George E. Battese¹, Tim Coelli¹•Institutions (1)

University of New England (Australia)¹

01 Jun 1995-Empirical Economics

TL;DR: In this paper, a stochastic frontier production function is defined for panel data on firms, in which the nonnegative technical inefficiency effects are assumed to be a function of firm-specific variables and time.

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Abstract: A stochastic frontier production function is defined for panel data on firms, in which the non-negative technical inefficiency effects are assumed to be a function of firm-specific variables and time. The inefficiency effects are assumed to be independently distributed as truncations of normal distributions with constant variance, but with means which are a linear function of observable variables. This panel data model is an extension of recently proposed models for inefficiency effects in stochastic frontiers for cross-sectional data. An empirical application of the model is obtained using up to ten years of data on paddy farmers from an Indian village. The null hypotheses, that the inefficiency effects are not stochastic or do not depend on the farmer-specific variables and time of observation, are rejected for these data.

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5,783 citations

"Stochastic frontier analysis using ..." refers background in this paper

...…including the model of Cornwell, Schmidt, and Sickles (1990), that of Lee and Schmidt (1993), the flexible model of Kumbhakar (1990), the time decay and the inefficiency effects models of Battese and Coelli (1992, 1995), and the “true” fixed- (TFE) and random-effects (TRE) models of Greene (2005a)....
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...ML random-effects time-varying inefficiency effects model (Battese and Coelli 1995) emean(varlist m [ , noconstant ] ) fits the Battese and Coelli (1995) conditional mean model, in which the mean of the truncated normal distribution is expressed as a linear function of the covariates specified in…...
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...Battese and Coelli (1995) proposed a similar specification for panel data....
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Book•

Stochastic Frontier Analysis

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Subal C. Kumbhakar¹, C. A. Knox Lovell²•Institutions (2)

University of Texas at Austin¹, University of New South Wales²

01 Jan 2000

TL;DR: The shadow price approach to the estimation and decomposition of economic efficiency was proposed in this paper, which incorporated exogenous influences on efficiency change and productivity change, and the estimation of technical efficiency was discussed.

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Abstract: 1. Introduction 2. Analytical foundations 3. The estimation of technical efficiency 4. The estimation and decomposition of cost efficiency 5. The estimation and decomposition of profit efficiency 6. The shadow price approach to the estimation and decomposition of economic efficiency 7. Incorporating exogenous influences on efficiency 8. The estimation of efficiency change and productivity change.

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3,396 citations

Journal Article•DOI•

On the estimation of technical inefficiency in the stochastic frontier production function model

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Peter Schmidt¹, James Jondrow²•Institutions (2)

Michigan State University¹, Center for Naval Analyses²

01 Aug 1982-Journal of Econometrics

TL;DR: In this paper, the expected value of u, conditional on (v − u ) is considered, where v is a normal error term representing pure randomness, and u is a non-negative error term describing technical inefficiency.

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3,378 citations

"Stochastic frontier analysis using ..." refers background or methods in this paper

...In this way, inefficiency estimates are obtained through the approach of Jondrow et al. (1982). Because the inefficiencies are drawn from a gamma distribution, a better fit can be obtained using the following command:...
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...of SF analysis is the estimation of inefficiency, we provide postestimation routines to compute both inefficiency and efficiency scores, as well as their confidence intervals (Jondrow et al. 1982; Battese and Coelli 1988; Horrace and Schmidt 1996)....
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...…calculates the standard error of the linear prediction. u produces estimates of (technical or cost) inefficiency via E(u|ε) using the estimator of Jondrow et al. (1982). m produces estimates of (technical or cost) inefficiency via M(u|ε), the mode of the conditional distribution of u|ε....
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...Cornwell, Schmidt, and Sickles (1990) and Lee and Schmidt (1993) provide a fixedeffects treatment of models like those proposed by Kumbhakar (1990) and Battese and Coelli (1992)....
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...All the estimates of Jondrow et al. (1982) are very close to the true simulated ones (u)....
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