IDENTIFICATION AND THE INFLUENCE FUNCTION OF OLLEY AND PAKES’ (1996) PRODUCTION FUNCTION ESTIMATOR

Jinyong Hahn, Zhipeng Liao and Geert Ridder

Econometric Theory, 2023, vol. 39, issue 5, 1044-1066

Abstract: In this paper, we reconsider the assumptions that ensure the identification of the production function in Olley and Pakes (1996, Econometrica 64, 1263–1297). We show that an index restriction plays a crucial role in the identification, especially if the capital stock is measured by the perpetual inventory method. The index restriction is not sufficient for identification under sample selectivity. The index restriction makes it possible to derive the influence function and the asymptotic variance of the Olley–Pakes estimator.

Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:cup:etheor:v:39:y:2023:i:5:p:1044-1066_6

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