Estimating Farm Efficiency in the Presence of Double Heteroscedasticity Using Panel Data

Kaddour Hadri (), Cherif Guermat and Julie Whittaker
Additional contact information
Cherif Guermat: University of Exeter, http://www.ex.ac.uk/~cguermat
Julie Whittaker: University of Exeter, http://www.ex.ac.uk/rbp/Staff/JMWhittaker/JMWhittaker.html

Journal of Applied Economics, 2003, vol. 6, 255-268

Abstract: The accuracy of technical efficiency measures is important given the interest in such measures in policy discussions. In recent years the use of stochastic frontiers has become : popular for estimating technical inefficiency, but estimated inefficiencies are sensitive to : specification errors. One source of such errors is heteroscedasticity. This paper addresses : this issue by extending the Hadri (1999) correction for heteroscedasticity to stochastic : production frontiers and to panel data. It is argued that heteroscedasticity within an estimation : can have a significant effect on results, and that correcting for heteroscedasticity yields : more accurate measures of technical inefficiency. Using panel data on cereal farms, it is : found that the usual technical efficiency measures used in stochastic production frontiers : are significantly sensitive to the extended correction for heteroscedasticity. :

Keywords: stochastic frontier production; heteroscedasticity; technical efficiency; panel data : (search for similar items in EconPapers)
JEL-codes: C23 C24 D24 Q12 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (16)

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Journal Article: Estimating Farm Efficiency in the Presence of Double Heteroscedasticity Using Panel Data (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cem:jaecon:v:6:y:2003:n:2:p:255-268

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