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Identification Properties of Recent Production Function Estimators
Author(s) -
Ackerberg Daniel A.,
Caves Kevin,
Frazer Garth
Publication year - 2015
Publication title -
econometrica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 16.7
H-Index - 199
eISSN - 1468-0262
pISSN - 0012-9682
DOI - 10.3982/ecta13408
Subject(s) - identification (biology) , production (economics) , estimator , function (biology) , computer science , econometrics , mathematics , statistics , economics , biology , evolutionary biology , macroeconomics , botany
This paper examines some of the recent literature on the estimation of production functions. We focus on techniques suggested in two recent papers, Olley and Pakes (1996) and Levinsohn and Petrin (2003). While there are some solid and intuitive identification ideas in these papers, we argue that the techniques can suffer from functional dependence problems. We suggest an alternative approach that is based on the ideas in these papers, but does not suffer from the functional dependence problems and produces consistent estimates under alternative data generating processes for which the original procedures do not.