Inference in stochastic frontier analysis with dependent error terms

Rachida El Mehdi and Christian Hafner

Mathematics and Computers in Simulation (MATCOM), 2014, vol. 102, issue C, 104-116

Abstract: Stochastic frontier analysis (SFA) is often used to estimate technical efficiency of entities such as firms, countries or municipalities. A potential dependence between the two components of the error term can be taken into account by a copula function. While estimation of the model is straightforward using the Corrected Ordinary Least Squares (COLS) and Maximum Likelihood (ML) methods, an open issue concerns the inference of the technical efficiencies. We propose a parametric bootstrap algorithm which is suitable for the dependence case. This allows us to estimate the efficiency percentile confidence intervals. We apply the model to the estimation of technical efficiencies of moroccan municipalities.

Keywords: Bootstrap; Copulas; Efficiency; Inference; Stochastic frontier analysis (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Journal Article: Inference in stochastic frontier analysis with dependent error terms (2014)
Working Paper: Inference in stochastic frontier analysis with dependent error terms (2014)
Working Paper: Inference in stochastic frontier analysis with dependent error terms (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matcom:v:102:y:2014:i:c:p:104-116

DOI: 10.1016/j.matcom.2013.09.008

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