Retrieving initial capital distributions from panel data

Xi Chen () and Tatiana Plotnikova

MPRA Paper from University Library of Munich, Germany

Abstract: A common problem in the empirical production analysis at the firm-level is that the initial values of capital are often missing in the data. Most empirical studies impute initial capital according to some ad hoc criteria based on a single arbitrary proxy. This paper evaluates the bias of production function estimations that is introduced when these traditional initial value approximations are used. We propose a generalized framework to deal with the missing initial capital problem by using multiple proxies where the choice of proxies is data-driven. We conduct a series of Monte Carlo experiments where the proposed method is tested against traditional approaches and apply the method to the firm-level data.

Keywords: capital stock measurement; production function estimation; Monte Carlo simulation; non-linear regression (search for similar items in EconPapers)
JEL-codes: C19 C81 D20 (search for similar items in EconPapers)
Date: 2014-09-10
New Economics Papers: this item is included in nep-ecm
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Citations: View citations in EconPapers (4)

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