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Comparing Malmquist and Hicks–Moorsteen productivity indices: Exploring the impact of unbalanced vs. balanced panel data

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  • Kerstens, Kristiaan
  • Van de Woestyne, Ignace

Abstract

We explore the effect of balancing unbalanced panel data when estimating primal productivity indices using non-parametric frontier estimators. First, we list a series of pseudo-solutions aimed at making an unbalanced panel balanced. Then, we discuss some intermediate solutions (e.g., balancing 2-years by 2years). Furthermore, we link this problem with a variety of literatures on infeasibilities, statistical inference of non-parametric frontier estimators, and the index theory literature focusing on the dynamics of entry and exit in industries. We then empirically illustrate these issues comparing both Malmquist and Hicks–Moorsteen productivity indices on two data sets. In particular, we test for the differences in distribution when comparing balanced and unbalanced results for a given index and when comparing Malmquist and Hicks–Moorsteen productivity indices for a given type of data set. The latter tests are crucial in answering the question to which extent the Malmquist index can approximate the Hicks–Moorsteen index that has a Total Factor Productivity (TFP) interpretation. Finally, we draw up a list of remaining issues that could benefit from further exploration.

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  • Kerstens, Kristiaan & Van de Woestyne, Ignace, 2014. "Comparing Malmquist and Hicks–Moorsteen productivity indices: Exploring the impact of unbalanced vs. balanced panel data," European Journal of Operational Research, Elsevier, vol. 233(3), pages 749-758.
  • Handle: RePEc:eee:ejores:v:233:y:2014:i:3:p:749-758
    DOI: 10.1016/j.ejor.2013.09.009
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    1. Diogo Cunha Ferreira & Rui Cunha Marques, 2016. "Malmquist and Hicks–Moorsteen Productivity Indexes for Clusters Performance Evaluation," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 15(05), pages 1015-1053, September.
    2. Seifert, Stefan, 2015. "Productivity Growth and its Sources - A StoNED Metafrontier Analyis of the German Electricity Generating Sector," Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112975, Verein für Socialpolitik / German Economic Association.
    3. repec:eee:transe:v:104:y:2017:i:c:p:52-68 is not listed on IDEAS
    4. repec:eee:ecmode:v:71:y:2018:i:c:p:34-44 is not listed on IDEAS
    5. Hideyuki Mizobuchi, 2015. "Multiple Directions for Measuring Biased Technical Change," CEPA Working Papers Series WP092015, School of Economics, University of Queensland, Australia.
    6. Mayer, Andreas & Zelenyuk, Valentin, 2014. "Aggregation of Malmquist productivity indexes allowing for reallocation of resources," European Journal of Operational Research, Elsevier, vol. 238(3), pages 774-785.
    7. Diewert, W. Erwin & Fox, Kevin J., 2017. "Decomposing productivity indexes into explanatory factors," European Journal of Operational Research, Elsevier, vol. 256(1), pages 275-291.
    8. Stefan Seifert, 2015. "Measuring Productivity When Technologies Are Heterogeneous: A Semi-Parametric Approach for Electricity Generation," Discussion Papers of DIW Berlin 1526, DIW Berlin, German Institute for Economic Research.
    9. Diewert, Erwin & Fox, Kevin J., 2014. "Decomposing Bjurek Productivity Indexes into Explanatory Factors," Economics working papers erwin_diewert-2014-32, Vancouver School of Economics, revised 30 Jun 2014.
    10. Md Aslam Mia & V. G. R. Chandran, 2016. "Measuring Financial and Social Outreach Productivity of Microfinance Institutions in Bangladesh," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 505-527, June.
    11. Casu, Barbara & Ferrari, Alessandra & Girardone, Claudia & Wilson, John O.S., 2016. "Integration, productivity and technological spillovers: Evidence for eurozone banking industries," European Journal of Operational Research, Elsevier, vol. 255(3), pages 971-983.
    12. repec:eee:eneeco:v:68:y:2017:i:c:p:303-312 is not listed on IDEAS
    13. C. J. O’Donnell & Saeideh Fallah-Fini & Konstantinos Triantis, 2017. "Measuring and analysing productivity change in a metafrontier framework," Journal of Productivity Analysis, Springer, vol. 47(2), pages 117-128, April.
    14. repec:kap:jproda:v:48:y:2017:i:2:d:10.1007_s11123-017-0513-7 is not listed on IDEAS

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