Flexible Functional Forms and Global Curvature Conditions
Two methods are developed for imposing curvature conditions globally in the estimation of cost functions. The first adopts a procedure due to Lau, for imposing the conditions locally, to a generalization of a functional form proposed by McFadden. With this functional form, imposing the appropriate conditions at one data point imposes the conditions globally. The second method adopts a technique used by Diewert, McFadden, and Barnett, which is based on the fact that a nonnegative sum of concave functions is concave. The suggested techniques are illustrated using the U.S. Manufacturing data utilized by E. R. Berndt and M. S. Khaled_(1979). Copyright 1987 by The Econometric Society.
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Volume (Year): 55 (1987)
Issue (Month): 1 (January)
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- Caves, Douglas W & Christensen, Laurits R, 1980. "Global Properties of Flexible Functional Forms," American Economic Review, American Economic Association, vol. 70(3), pages 422-32, June.
- Berndt, Ernst R & Khaled, Mohammed S, 1979. "Parametric Productivity Measurement and Choice among Flexible Functional Forms," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1220-45, December.
- A. Ronald Gallant & Gene H. Golub, 1982.
"Imposing Curvature Restrictions on Flexible Functional Forms,"
538, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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- Barnett, William A & Lee, Yul W, 1985. "The Global Properties of the Miniflex Laurent, Generalized Leontief, and Translog Flexible Functional Forms," Econometrica, Econometric Society, vol. 53(6), pages 1421-37, November.
- Lau, Lawrence J., 1978. "Applications of Profit Functions," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 3 McMaster University Archive for the History of Economic Thought.
- Barnett, William A, 1983. "New Indices of Money Supply and the Flexible Laurent Demand System," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(1), pages 7-23, January.
- Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
- Wales, Terence J., 1977. "On the flexibility of flexible functional forms : An empirical approach," Journal of Econometrics, Elsevier, vol. 5(2), pages 183-193, March.
- Elbadawi, Ibrahim & Gallant, A Ronald & Souza, Geraldo, 1983. "An Elasticity Can Be Estimated Consistently without A Priori Knowledge of Functional Form," Econometrica, Econometric Society, vol. 51(6), pages 1731-51, November.
- Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
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