Statalist


[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

st: Olley Pakes estimation (-opreg- versus -levpet-)


From   Luigi Pascali <Luigi.Pascali@bc.edu>
To   statalist@hsphsun2.harvard.edu
Subject   st: Olley Pakes estimation (-opreg- versus -levpet-)
Date   Mon, 15 Dec 2008 18:51:24 -0500

Dear all,
 
first of all, thank you very much for your prompt answers. They were very helpful!

However I still have some doubts. I would like to estimate a gross revenue production function in a panel without entry/exit dynamics. Moreover, I would like to use "Investments" (which is not an input in the production function) as a proxy for TFP shocks and not "Intermediates" as in Levinsohn-Petrin.

(Ackerberg, Caves and Frazer (2006) shows that the Levinsohn-Petrin methodology suffers of a serious collinearity problem)  

I cannot use -opreg- if I don't have firms leaving the markets. However, I also cannot use -levpet- since in this routine, when estimating a gross revenue production function, the proxy variable ("investments" in my case) is also considered as an input in the production function.

When I use the -opreg- routine and "pretend" that a single firm (over more than a thousand) leaves the market, the routine works and I get very reasonable estimates of the production function. Since I don't know exactly how the routine works, I would like to know if you think that I am making any major mistake that could affect my estimation. 

Thank you so much,
Luigi


 |  On Mon, 15 Dec 2008 15:33:51 -0500
 |  "Rafal Raciborski" <rraciborski@gmail.com> wrote:
 |  luigi,
 |  
 |  for opreg to work, some firms must exit the market.  if none does, you
 |  may use the user-written -levpet- command which controls for
 |  simultaneity but not the selection bias.  -search levpet- will locate
 |  the command for you.
 |  
 |  best,
 |  
 |  rafal
 |  
 |  
 |  
 |  On Mon, Dec 15, 2008 at 2:37 PM, Luigi Pascali <Luigi.Pascali@bc.edu> wrote:
 |  > I need to estimate a production function using the olley-pakes semiparametric estimation procedure. I am using the routine -opreg- (developed by Yasar, Raciborski, & Poi).
 |  > I don't have firms that exit the panel and this seems to be a problem when running opreg.
 |  > The option "exit" in the command is required. For this reason I have constructed a dummy (that I called E) which is equal to 0 in each period for every firm.
 |  > Then I run the following command:
 |  > opreg lY, state(lK) proxy(lI) free(lL lM) exit(E)
 |  >
 |  > where lY=ln(sales)
 |  > lk=ln(fixed assets)
 |  > lL=ln(employees)
 |  > lM=ln(intermediates)
 |  > lI=ln(investments)
 |  >
 |  > I get the following message:
 |  >
 |  > an error occurred when bootstrap executed opreg
 |  > r(2000);
 |  >
 |  > I tried to run the same command "pretending" that some firms where leaving the market and everything worked fine.
 |  > I would really appreciate if anybody could tell me if I am making any mistake and how I can correct it.
 |  >
 |  > Many thanks,
 |  >
 |  > Luigi
 |  >
 |  > *
 |  > *   For searches and help try:
 |  > *   http://www.stata.com/help.cgi?search
 |  > *   http://www.stata.com/support/statalist/faq
 |  > *   http://www.ats.ucla.edu/stat/stata/
 |  >
 |  *
 |  *   For searches and help try:
 |  *   http://www.stata.com/help.cgi?search
 |  *   http://www.stata.com/support/statalist/faq
 |  *   http://www.ats.ucla.edu/stat/stata/

*
*   For searches and help try:
*   http://www.stata.com/help.cgi?search
*   http://www.stata.com/support/statalist/faq
*   http://www.ats.ucla.edu/stat/stata/



© Copyright 1996–2014 StataCorp LP   |   Terms of use   |   Privacy   |   Contact us   |   What's new   |   Site index