A stochastic frontier model with structural breaks in efficiency and technology

Guangjie Li ()

Empirical Economics, 2015, vol. 49, issue 1, 159 pages

Abstract: We have developed a stochastic frontier model with appropriate priors to estimate the locations and number of structural breaks for both production efficiency and technology, which experience different regime changes. We assume different units could have unknown common break dates. Although panel data with large cross-sectional size can help identify the break locations, it could render posterior simulation very inefficient. Hence, care must be taken to avoid such problems. We apply our method to study the world production over the period of 1960–2007 and find that the data support structural breaks in technology rather than in efficiency. For most countries under study, the most important source of growth is capital accumulation. The technology adopted by different countries shows signs of convergence. Changes of technology usually happen after economic crises to compensate for negative capital growth. Alternative modelling approach and priors are used for robustness check. Copyright Springer-Verlag Berlin Heidelberg 2015

Keywords: Change point model; Economic growth; Hidden Markov model; Markov chain Monte Carlo; Panel data; Stochastic frontier model; C11; C13; C15; O0 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1007/s00181-014-0852-4 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:empeco:v:49:y:2015:i:1:p:131-159

Ordering information: This journal article can be ordered from
http://www.springer. ... rics/journal/181/PS2

DOI: 10.1007/s00181-014-0852-4

Access Statistics for this article

Empirical Economics is currently edited by Robert M. Kunst, Arthur H.O. van Soest, Bertrand Candelon, Subal C. Kumbhakar and Joakim Westerlund

More articles in Empirical Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().