A model for technical inefficiency effects in a stochastic frontier production function for panel data | Zendy

George E. Battese | Zendy; Timothy Coelli | Zendy

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A model for technical inefficiency effects in a stochastic frontier production function for panel data

Author(s) -

George E. Battese,

Timothy Coelli

Publication year - 1995

Publication title -

empirical economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.605

H-Index - 56

eISSN - 1435-8921

pISSN - 0377-7332

DOI - 10.1007/bf01205442

Subject(s) - inefficiency , panel data , econometrics , economics , production (economics) , variance (accounting) , truncated normal distribution , function (biology) , stochastic modelling , production–possibility frontier , null hypothesis , random effects model , frontier , mathematics , statistics , microeconomics , history , accounting , archaeology , evolutionary biology , biology , medicine , meta analysis

A stochastic frontier production function is defined for panel data on firms, in which the non-negative technical inefficiency effects are assumed to be a function of firm-specific variables and time. The inefficiency effects are assumed to be independently distributed as truncations of normal distributions with constant variance, but with means which are a linear function of observable variables. This panel data model is an extension of recently proposed models for inefficiency effects in stochastic frontiers for cross-sectional data. An empirical application of the model is obtained using up to ten years of data on paddy farmers from an Indian village. The null hypotheses, that the inefficiency effects are not stochastic or do not depend on the farmer-specific variables and time of observation, are rejected for these data.

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