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Inference for Aggregate Efficiency: Theory and Guidelines for Practitioners

Leopold Simar, Valentin Zelenyuk and Shirong Zhao ()
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Shirong Zhao: School of Finance, Dongbei University of Finance and Economics, Dalian, Liaoning 116025

No WP032023, CEPA Working Papers Series from University of Queensland, School of Economics

Abstract: We expand the recently developed framework for the inference for aggregate efficiency, by extending the existing theory and providing guidelines for practitioners. In particular, we develop the central limit theorems (CLTs) for aggregate input-oriented efficiency, analogous to the output-oriented framework established by Simar and Zelenyuk (2018). To further improve the finite sample performance of the developed CLTs, we propose a simple yet easy to implement method through using the biascorrected individual efficiency estimate to improve the variance estimator. The extensive Monte-Carlo experiments confirmed the developed CLTs for aggregate inputoriented efficiency and also confirmed the better performance of our proposed method in the finite sample sizes. Finally, we use two well-known empirical data sets to illustrate the differences across the existing methods to facilitate the use by practitioners.

Keywords: Data Envelopment Analysis; Efficiency; Non-parametric Efficiency Estimators; Free Disposal Hull; Aggregate Efficiency (search for similar items in EconPapers)
JEL-codes: C1 C3 (search for similar items in EconPapers)
Date: 2023-03
New Economics Papers: this item is included in nep-ecm and nep-eff
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https://economics.uq.edu.au/files/42323/WP032023.pdf (application/pdf)

Related works:
Journal Article: Inference for aggregate efficiency: Theory and guidelines for practitioners (2024) Downloads
Working Paper: Inference for Aggregate Efficiency: Theory and Guidelines for Practitioners (2023) Downloads
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