Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 271, Issue 2, Pages 746-755Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.ejor.2018.04.043
Keywords
Productivity and competitiveness; Stochastic frontier; Persistent and transient technical inefficiency; Closed skew-normal distribution
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In this paper we consider a stochastic frontier panel data model in which the random firm-effects are separated from the persistent and transient technical inefficiency. The model is extended to accommodate factors that can explain both persistent and transient technical inefficiency. We derive formulas to estimate both types of inefficiency and compute marginal effects of the determinants on each type of inefficiency. Our simulation results show that both biases and mean square errors decrease with an increase in sample size (NT). To illustrate the working of our model, we also provide results from an empirical application using data from 40 advanced industrialized, newly industrialized, transition and emerging economies observed from 1995-2006. (C) 2018 Elsevier B.V. All rights reserved.
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