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Re: st: xtfrontier tvd

From   Gordon Hughes <>
Subject   Re: st: xtfrontier tvd
Date   Sun, 08 May 2011 18:02:30 +0100

I think that you should think further about what you are trying to do. Just because the method exists in software does not mean that it is sensible or appropriate to use it.

Your original message said that the time invariant (ti) models converge satisfactorily. One possible inference from the difficulty that you have in estimating the time varying (tvd) model is that this model does not fit the data very well. This is not unusual - in my experience it is difficult to obtain sensible estimates from the tvd specification and the symptoms that you report are quite typical of what happens.

However, if you are sure that you want to persist, then you should start the estimation from the parameter values for the converged ti specification because this is a restricted version of the tvd specification - not just for the usual coefficients on the variables but also for other parameters. Switching between DFP and BFGS will sometimes work, though it takes a lot of steps.

Finally, the term "technical efficiency" is a bit misleading. Look at the manual and you will see that --predict xxx, te-- generates values of E{exp(-su[it]) | eps[it]} which is the one-sided efficiency residual relative to the frontier. In other words, I suspect that your 10% values means that costs/output are 10% above/below the efficient frontier.

Gordon Hughes

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