Production function estimation in Stata using inputs to control for unobservables
AbstractA key issue in the estimation of production functions is the correlation between unobservable productivity shocks and input levels. Profit-maximizing firms respond to positive productivity shocks by expanding output, which requires additional inputs. Negative shocks lead firms to pare back output, decreasing their input usage. Olley and Pakes (1996) develop an estimator that uses investment as a proxy for these unobservable shocks. More recently, Levinsohn and Petrin (2003a) introduce an estimator that uses intermediate inputs as proxies, arguing that intermediates may respond more smoothly to productivity shocks. This paper reviews Levinsohn and Petrin's approach and introduces a Stata command that implements it. Copyright 2004 by StataCorp LP.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by StataCorp LP in its journal Stata Journal.
Volume (Year): 4 (2004)
Issue (Month): 2 (June)
Note: Windows users should not attempt to download these files with a web browser.
Contact details of provider:
Web page: http://www.stata-journal.com/
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James Levinsohn & Amil Petrin, 2003.
"Estimating Production Functions Using Inputs to Control for Unobservables,"
Review of Economic Studies,
Wiley Blackwell, vol. 70(2), pages 317-341, 04.
- James Levinsohn & Amil Petrin, 2000. "Estimating Production Functions Using Inputs to Control for Unobservables," NBER Working Papers 7819, National Bureau of Economic Research, Inc.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum) or (Lisa Gilmore).
If references are entirely missing, you can add them using this form.