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Efficiency measurement with nonstationary variables: an application of panel cointegration techniques

Author

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  • Efthymios Tsionas

    (Athens University of Economics and Business)

  • Dimitris Christopoulos

    (Panteion University)

Abstract

In this paper, we apply panel cointegration tests and estimation techniques to obtain efficiency measures when it is uncertain whether the underlying technological relationship is structural or spurious due to possible non-stationarity of the data. We illustrate the dangers of efficiency measurement with panel data when integration and cointegration are not taken into account. We apply these techniques to efficiency measurement in U.S. airlines and find striking differences compared to results obtained with the traditional approach.

Suggested Citation

  • Efthymios Tsionas & Dimitris Christopoulos, 2001. "Efficiency measurement with nonstationary variables: an application of panel cointegration techniques," Economics Bulletin, AccessEcon, vol. 3(14), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-01c20005
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    References listed on IDEAS

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    2. Harris, Richard D. F. & Tzavalis, Elias, 1999. "Inference for unit roots in dynamic panels where the time dimension is fixed," Journal of Econometrics, Elsevier, vol. 91(2), pages 201-226, August.
    3. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
    4. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
    5. G. S. Maddala & Shaowen Wu, 1999. "A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(S1), pages 631-652, November.
    6. Badi H. Baltagi & James M. Griffin & Sharada R. Vadali, 1998. "Excess capacity: a permanent characteristic of US airlines?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(6), pages 645-657.
    7. repec:bla:obuest:v:61:y:1999:i:0:p:631-52 is not listed on IDEAS
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    Cited by:

    1. Jaap W. B. Bos & Bertrand Candelon & Claire Economidou, 2016. "Does knowledge spill over across borders and technology regimes?," Journal of Productivity Analysis, Springer, vol. 46(1), pages 63-82, August.

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    More about this item

    Keywords

    Cointegration;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • D2 - Microeconomics - - Production and Organizations

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