Leveraging Subjective Expectations for Production Functions

Steve Bond, Agnes Norris Keiller, Áureo de Paula and John Van Reenen

AEA Papers and Proceedings, 2026, vol. 116, 469-474

Abstract: Norris Keiller, de Paula, and Van Reenen (2024) (NPR) propose estimating production functions using firms' subjective expectations of future output and inputs, data which are becoming increasingly available in surveys. This note compares their proposed estimator to traditional dynamic panel data (e.g., Blundell and Bond 2000) and proxy variable methods (e.g., Olley and Pakes 1996). While NPR allows for nonlinear productivity processes, we discuss commonalities with the former when those processes are linear. We note that NPR may be more robust to oligopolistic competition than the latter since it does not employ input demand relations to proxy for productivity.

JEL-codes: C23 C51 D21 D24 D43 D84 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/pandp.20261105

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