Advanced Search
MyIDEAS: Login

A Post-Truncation Parameterization of Truncated Normal Technical Inefficiency

Contents:

Author Info

Registered author(s):

    Abstract

    In this paper we consider a stochastic frontier model in which the distribution of technical inefficiency is truncated normal. In standard notation, technical inefficiency u is distributed as N^+ (μ,σ^2). This distribution is affected by some environmental variables z that may or may not affect the level of the frontier but that do affect the shortfall of output from the frontier. We will distinguish the pre-truncation mean (μ) and variance (σ^2) from the post-truncation mean μ_*=E(u) and variance σ_*^2=var(u). Existing models parameterize the pre-truncation mean and/or variance in terms of the environmental variables and some parameters. Changes in the environmental variables cause changes in the pre-truncation mean and/or variance, and imply changes in both the post-truncation mean and variance. The expressions for the changes in the post-truncation mean and variance are quite complicated. In this paper, we suggest parameterizing the post-truncation mean and variance instead. This leads to simple expressions for the effects of changes in the environmental variables on the mean and variance of u, and it allows the environmental variables to affect the mean of u only, or the variance of u only, or both.

    Download Info

    If 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.
    File URL: http://www.econ.sinica.edu.tw/UpFiles/2013090214141704234/Seminar_PDF2013090215154176273/13-A002(all)new.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Institute of Economics, Academia Sinica, Taipei, Taiwan in its series IEAS Working Paper : academic research with number 13-A002.

    as in new window
    Length: 30 pages
    Date of creation: Apr 2013
    Date of revision: Dec 2013
    Handle: RePEc:sin:wpaper:13-a002

    Contact details of provider:
    Phone: 886-2-27822791
    Fax: 886-2-27853946
    Email:
    Web page: http://www.econ.sinica.edu.tw/index.php?foreLang=en
    More information through EDIRC

    Related research

    Keywords:

    This paper has been announced in the following NEP Reports:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:sin:wpaper:13-a002. See general 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: (HsiaoyunLiu).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.