Robust Error Specification in a Production System
AbstractEconomists estimating demand and supply systems face the question of using shares or quantities as dependent variables. This article finds that inconsistent estimates are obtained if one makes the wrong choice. A robust structure is presented to let the data choose the preferred form. Empirical applications to U.S. and Texas agriculture using the generalized method of moments suggest that shares and quantities are rejected in favor of a more general functional form. The Texas application provides some evidence for fixed capital but not for labor. Copyright 2013, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 95 (2013)
Issue (Month): 3 ()
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Other versions of this item:
- Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
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- Thompson, Gary D., 1988. "Choice Of Flexible Functional Forms: Review And Appraisal," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(02), December.
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- Bryan W. Brown & Mary Beth Walker, 1992. "Stochastic specification in random production models of cost minimizing firms," Working Paper 92-6, Federal Reserve Bank of Atlanta.
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