Technology Modeling: Curvature is not Sufficient for Regularity

William Barnett (), Milka Kirova and Meenakshi Pasupathy
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Milka Kirova: Washington University in St. Louis
Meenakshi Pasupathy: Washington University in St. Louis

Econometrics from EconWPA

Abstract: We estimate the generalized McFadden (generalized quadratic) production function by GMM for a manufacturing firm that uses risky monetary assets among its inputs and for a bank that produces risky monetary assets as outputs. We impose curvature globally and monotonicity at a point, as is the capability of the model. We find that monotonicity is violated at many data points away from the one point at which it is imposed. We conclude that the model's inability to impose monotonicity globally is a serious limitation, despite the ability to impose curvature globally.

Keywords: regularity; quadratic; technology; curvature; monotonicity (search for similar items in EconPapers)
JEL-codes: C3 (search for similar items in EconPapers)
Date: Written
Note: Type of Document - Microsoft Word; prepared on Macintosh; to print on PostScript; pages: 48 ; See
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