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Total Factor Productivity Decomposition and Unobserved Heterogeneity in Stochastic Frontier Models

Published online by Cambridge University Press:  15 September 2016

Magnus A. Kellermann
Magnus A. Kellermann*
Affiliation:
Environmental Economics and Agricultural Policy Group of Technische Universität in Muenchen, Germany
*
Correspondence: Environmental Economics and Agricultural Policy Group ▪ TUM School of Management ▪ Technische Universität Muenchen ▪ Alte Akademie 14, 85350 ▪ Freising GERMANY ▪ Phone +49.8161.71.3576 ▪ Email magnus.kellermann@tum.de.
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Abstract

This study examines in an empirical comparison how different econometric specifications of stochastic frontier models affect the decomposition of total factor productivity growth. We estimate nine stochastic frontier models, which have been widely used in empirical investigations of sources of productivity growth. Our results show that the relative contribution of components to total factor productivity growth is quite sensitive to the choice of econometric model, which points to the need to select the “right” model. We apply various statistical tests to narrow the range of applicable models and identify additional criteria upon which to base the choice of non-nested models.

Keywords

heterogeneitypanel datastochastic frontierTFP decomposition
Type
Research Article
Information
Agricultural and Resource Economics Review , Volume 44 , Issue 1 , April 2015 , pp. 124 - 148
Copyright
Copyright © 2015 Northeastern Agricultural and Resource Economics Association 

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