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Robust Error Specification in a Production System

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  • Rulon D. Pope
  • Jeffrey T. LaFrance

Abstract

Economists 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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  • Rulon D. Pope & Jeffrey T. LaFrance, 2013. "Robust Error Specification in a Production System," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(3), pages 669-684.
    • Handle: RePEc:oup:ajagec:v:95:y:2013:i:3:p:669-684
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    File URL: http://hdl.handle.net/10.1093/ajae/aas136
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    Cited by:

    1. Binlei Gong, 2020. "New Growth Accounting," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(2), pages 641-661, March.
    2. Adélaïde Fadhuile & Stéphane Lemarié & Alain Pirotte, 2016. "Disaggregating the Demand for Pesticides: Does it Matter?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(2), pages 223-252, June.

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    More about this item

    JEL classification:

    • 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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