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Technology Modeling: Curvature is not Sufficient for Regularity

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Author Info

  • William A. Barnett

    (Washington University in St. Louis)

  • Milka Kirova

    (Washington University in St. Louis)

  • Meenakshi Pasupathy

    (Washington University in St. Louis)

Abstract

We estimate the generalized McFadden (generalized quadratic) production function by GMM for a manufacturing firm that uses risky monetary assets among its inputs and for a bank that produces risky monetary assets as outputs. We impose curvature globally and monotonicity at a point, as is the capability of the model. We find that monotonicity is violated at many data points away from the one point at which it is imposed. We conclude that the model's inability to impose monotonicity globally is a serious limitation, despite the ability to impose curvature globally.

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Bibliographic Info

Paper provided by EconWPA in its series Econometrics with number 9602002.

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Length: 48 pages
Date of creation: 12 Feb 1996
Date of revision: 24 Jun 1999
Handle: RePEc:wpa:wuwpem:9602002

Note: Type of Document - Microsoft Word; prepared on Macintosh; to print on PostScript; pages: 48 ; See
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Keywords: regularity quadratic technology curvature monotonicity;

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References

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Cited by:
  1. Ryan, David L & Wales, Terence J, 1998. "A Simple Method for Imposing Local Curvature in Some Flexible Consumer-Demand Systems," Journal of Business & Economic Statistics, American Statistical Association, vol. 16(3), pages 331-38, July.

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