Estimation of inefficiency in stochastic frontier models: a Bayesian kernel approach
Guohua Feng (),
Chuan Wang () and
Xibin Zhang ()
Additional contact information
Guohua Feng: University of North Texas
Chuan Wang: Zhongnan University of Economics and Law
Xibin Zhang: Monash University
Journal of Productivity Analysis, 2019, vol. 51, issue 1, 1-19
Abstract We propose a kernel-based Bayesian framework for the analysis of stochastic frontiers and efficiency measurement. The primary feature of this framework is that the unknown distribution of inefficiency is approximated by a transformed Rosenblatt-Parzen kernel density estimator. To justify the kernel-based model, we conduct a Monte Carlo study and also apply the model to a panel of U.S. large banks. Simulation results show that the kernel-based model is capable of providing more precise estimation and prediction results than the commonly-used exponential stochastic frontier model. The Bayes factor also favors the kernel-based model over the exponential model in the empirical application.
Keywords: Kernel density estimation; Efficiency measurement; Stochastic distance frontier; Markov Chain Monte Carlo (search for similar items in EconPapers)
JEL-codes: C11 D24 G21 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s11123-018-0542-x Abstract (text/html)
Access to full text is restricted to subscribers.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:jproda:v:51:y:2019:i:1:d:10.1007_s11123-018-0542-x
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11123/PS2
Access Statistics for this article
Journal of Productivity Analysis is currently edited by William Greene, Chris O'Donnell and Victor Podinovski
More articles in Journal of Productivity Analysis from Springer
Bibliographic data for series maintained by Sonal Shukla ().