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From |
"Dean DeRosa" <dderosa@adr-i.com> |

To |
<statalist@hsphsun2.harvard.edu> |

Subject |
st: xtfrontier vs xtreg, re mle |

Date |
Fri, 23 Apr 2010 11:48:48 -0400 |

I am new to stochastic frontier (SF) analysis, and I have been experimenting with the xtfrontier command to estimate the parameters of a trade gravity model. I have been struck by the similarity of SF theory and its setup in Stata to the more common practice of estimating trade gravity models using the random effects (RE) method of estimation for panel data sets. On conducting side-by-side experiments using the two approaches in Stata (xtfrontier versus xtreg, re mle), I find that the gravity model estimates are virtually identical, except with regard to the intercept term -- sensibly, the SF intercept estimate is greater in value than the RE estimate. Is this a common if not expected finding? Or, is this finding related to some problem with Stata? Any citations to similar findings would be welcome, as would a straightforward explanation for the finding. Finally, I would appreciate any citations to basic or introductory explanations of the diagnostic statistics, such as mu, gamma, etc., generally reported by Stata and published studies featuring SF estimation results. * * 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/

**Follow-Ups**:**Re: st: xtfrontier vs xtreg, re mle***From:*Scott Merryman <scott.merryman@gmail.com>

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