Accounting for (In)Efficiency in the Estimation of Time-Varying Returns to Scale
AbstractThis paper has a two-fold contribution. First, it examines the importance of accounting for (in)efficiency in the estimation of primal production function on the input elasticities, technical change, and calculation of returns to scale. Second, it applies a variant of the rolling regression technique to identify time-varying input elasticities, technical change, and return to scale. Empirical application to the Asian agriculture sector using Food and Agricultural Organization data from 1961-2005 indicates returns to scale are underestimated by the traditional pooled and panel models. Further, the time-varying estimates of input elasticities, technical change, and returns to scale indicate variations with each additional year of information.
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Bibliographic InfoPaper provided by North Dakota State University, Department of Agribusiness and Applied Economics in its series Agribusiness & Applied Economics Report with number 44308.
Date of creation: Oct 2008
Date of revision:
Asian agriculture sector; time-varying input elasticities; technical change; and returns to scale; pooled; two-way random effect; stochastic frontier analysis; 1961-2005.; Agribusiness;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2008-12-14 (Agricultural Economics)
- NEP-ALL-2008-12-14 (All new papers)
- NEP-EFF-2008-12-14 (Efficiency & Productivity)
- NEP-SEA-2008-12-14 (South East Asia)
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- Coleman, Jane A. & Shaik, Saleem, 2009. "Time-Varying Estimation of Crop Insurance Program in Altering North Dakota Farm Economic Structure," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49516, Agricultural and Applied Economics Association.
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