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From |
"Scott Merryman" <scott.merryman@gmail.com> |

To |
statalist@hsphsun2.harvard.edu |

Subject |
Re: st: technical efficiency using -xtrc- |

Date |
Wed, 6 Feb 2008 14:18:10 -0600 |

Why are you using -xtrc- to estimate efficiency and not -frontier- or -xtfrontier- ? Scott On Feb 4, 2008 2:48 AM, Viktor Slavtchev <viktor.slavtchev@uni-jena.de> wrote: > Dear all, > I wish to estimate the technical efficiency at firm level in panel data. > The production function (Cobb-Douglas) is considered to have one output > and one input, y = a * x^beta > After taking logs of both sides I try to estimate the following equation: > y[i,t]=alpha[i] + beta[i]*x[i,t] + e[i,t]. > The technical efficiency can be computed as: > TE[i,t]=exp(y[i,t] - y'[i,t]), > where y[i,t] is the firm's actual output (not the estimated). > y'[i,t] is the technical frontier computed considering the maximum > values for alpha and beta: y'[i,t]=max_i(alpha[i]) + > max_i(beta[i])*x[i,t] + e[i,t]. > That is the firm's observed output is compared to the maximum possible > output, i.e. if the firm's production function would have the largest > possible intercept and the largest possible slope. > To estimate the alpha and beta I use -xtrc-. However, and that's my > problem, the interval for the estimates of both, alpha and beta is huge. > Considering the slope (beta), the values become in some cases even > negative. Given the huge variation in alpha and beta, the efficiency > measure appears in some cases implausible small. > Does anybody has more experience with estimating efficiency? Any help is > greatly appreciated. > Best regards, > viktor * * For searches and help try: * http://www.stata.com/support/faqs/res/findit.html * http://www.stata.com/support/statalist/faq * http://www.ats.ucla.edu/stat/stata/

**Follow-Ups**:**Re: st: technical efficiency using -xtrc-***From:*Viktor Slavtchev <viktor.slavtchev@uni-jena.de>

**References**:**st: technical efficiency using -xtrc-***From:*Viktor Slavtchev <viktor.slavtchev@uni-jena.de>

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