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Measuring productivity and efficiency: a Kalman filter approach

Listed author(s):
  • Meryem Duygun

    (University of Leicester
    University of Nottingham)

  • Levent Kutlu

    ()

    (Antalya International University
    Georgia Institute of Technology)

  • Robin C. Sickles

    (Rice University)

Abstract In the Kalman filter setting, one can model the inefficiency term of the standard stochastic frontier composed error as an unobserved state. In this study a panel data version of the local level model is used for estimating time-varying efficiencies of firms. We apply the Kalman filter to estimate average efficiencies of U.S. airlines and find that the technical efficiency of these carriers did not improve during the period 1999–2009. During this period the industry incurred substantial losses, and the efficiency gains from reorganized networks, code-sharing arrangements, and other best business practices apparently had already been realized.

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File URL: http://link.springer.com/10.1007/s11123-016-0477-z
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Article provided by Springer in its journal Journal of Productivity Analysis.

Volume (Year): 46 (2016)
Issue (Month): 2 (December)
Pages: 155-167

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Handle: RePEc:kap:jproda:v:46:y:2016:i:2:d:10.1007_s11123-016-0477-z
DOI: 10.1007/s11123-016-0477-z
Contact details of provider: Web page: http://www.springer.com

Order Information: Web: http://www.springer.com/economics/microeconomics/journal/11123/PS2

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