Nonparametric Estimation of Homothetic and Homothetically Separable Functions

Arthur Lewbel and Oliver Linton

STICERD - Econometrics Paper Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: For vectors x and w, let r(x,w) be a function that can be nonparametrically estimated consistently and asymptotically normally. We provide consistent, asymptotically normal estimators for the functions g and h, where r(x,w) = h[g(x), w], g is linearly homogeneous and h is monotonic in g. This framework encompasses homothetic and homothetically separable functions. Such models reduce the curse of dimensionality, provide a natural generalization of linear index models, and are widely used in utility, production, and cost function applications. Extensions to related functional forms include a generalized partly linear model with unknown link function. We provide simulation evidence on the small sample performance of our estimator, and we apply our method to a Chinese production dataset.

Keywords: Cost function; economic scale; homogeneous function; homothetic function; index models; nonparametric; production function; separability. (search for similar items in EconPapers)
Date: 2003-10
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Nonparametric estimation of homothetic and homothetically separable functions (2003)
Working Paper: Nonparametric estimation of homothetic and homothetically separable functions (2003)
Working Paper: Nonparametric estimation of homothetic and homothetically separable functions (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:stiecm:461

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