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A constrained state space approach for estimating firm efficiency

Levent Kutlu

Economics Letters, 2017, vol. 152, issue C, 54-56

Abstract: In this study a panel data state space approach is used to estimate efficiencies of productive units where the states are required to lie in a closed convex constraint set. The constraints are imposed by using oblique projections of state variables onto the constraint set. This approach provides a flexible approximation that can capture the time-varying pattern of firm specific efficiency.

Keywords: Kalman filter; Panel data; Stochastic frontier (search for similar items in EconPapers)
JEL-codes: C13 C2 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:ecolet:v:152:y:2017:i:c:p:54-56