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Re: st: proxy in opreg


From   Rafal Raciborski <[email protected]>
To   [email protected]
Subject   Re: st: proxy in opreg
Date   Mon, 16 Aug 2010 11:27:36 -0500

Caroline,

The theoretical framework of Olley-Pakes requires 'investment' as a
proxy variable.

The Levinsohn and Petrin model allows intermediate inputs (energy,
material) to be used as proxies.

Rafal




On Mon, Aug 16, 2010 at 3:04 AM, Caroline Dotter <[email protected]> wrote:
> Hi,
>
> I am estimating a production function in stata 9.2 using the opreg command provided by Yasar, Raciborski and Poi.
>
> I wanted to know, if it is sensible to use a different proxy for unobserved productivity than investment. Only 1/4 of my data have positive investment, so I'd prefer to use intermediate inputs to investment. I cannot use the levpet command as it only allows for one state variable, while I have two state variables (capital and labour).
> The article accompanying the command only refers to investment being the typical proxy and does not say whether any other variables are "allowed". Does my estimation make sense when using a differenet proxy or do I violate assumptions?
>
> I hope you can help me.
>
> Many Thanks,
>
> Caroline Dotter
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