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Re: st: frontier

From   Nick Cox <>
Subject   Re: st: frontier
Date   Mon, 17 Dec 2012 18:53:36 +0000

The disjunction here does not appeal to me (either you are doing
academic research in economics or my advice is fine!).

I imagine that Yuval's underlying point is that work on inefficiency
cannot be taken seriously if no there is no definition of inefficiency
to be discussed. Normally I would align myself with this kind of
comment, but my point was, and remains, that given an interest in
applying the -frontier- command, "inefficiency" is as defined by that
kind of model and so the lack of a definition seems unsurprising.


On Mon, Dec 17, 2012 at 4:57 PM, Yuval Arbel <> wrote:

> An important question is what is the objective of the regression
> analysis. My implicit assumption (which might be incorrect) was that
> it was intended for academic research in Economics. If it is not, then
> Nick's advice is fine

On Mon, Dec 17, 2012 at 6:39 PM, Khurshid Djalilov
<> wrote:

Thanks very much for your comment, I did not mention this in the post.
By 'bank efficiency' I mean how efficiently banks are using their
resources to maximise (minimise) their profits (costs).  Following
'intermediation' approach, I selected bank input and output variables.

Nick Cox

In this case, "inefficiency" is defined by the context of the
-frontier- command mentioned.

My advice is to read the help file first and then the manual entry.

Being a new user does not oblige anyone to fill in for those basics

Yuval Arbel

Unfortunately, your question is not very well defined. The term
"Inefficiency" in Economics have many interpretations. It could be
inefficiency to society, in which case Banks are highly inefficient,
because they are discriminating Monopolies, it could be inefficiency
of the Bank, namely the Bank does not maximizes profit, and it could
be inefficiency in terms of rational expectation theory, namely price
movements in the market are not random.

Before you go on, my suggestion to you is to make some search of the
academic literature either in google scholar or econlit.

On Mon, Dec 17, 2012 at 4:52 PM, Khurshid Djalilov
<> wrote:

>>> I am trying to investigate Cost (Profit) inefficiencies for 86 banks representing two different regions (panel data).
>>> In addition to input-output variables I have dummy as well as economic development variables. I was wondering how I can generate cost and profit efficiencies as I am a new user and am having problems with this.
>>> The variable I have as following:
>>> TC - dependent variable, PBF - (input, independent variable), OV -
>>> (input, independent variable), TL - (output, independent variable), OEA - (output, independent variable), NFC - (output, independent variable), N1 - (netput, independent variable), N2 - (netput, independent variable), Y - (time, independent), r - regional dummy (independent), g - growth (independent), inf - inflation (independent).
>>> I would appreciate if anyone could write commands using these variables, please.

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