Testing Multiple Non-nested Factor Demand Systems
Empirical factor demand analysis typically involves making a choice from among several competing non-nested functional forms. Each of the commonly used factor demand systems, such as Translog, Generalized Leontief, Quadratic, and Generalized McFadden, can provide a valid and useful empirical description of the underlying production structure of the firm. As there is no theoretical guidance on selecting the model which is best able to capture the relevant features of the data, formal testing procedures can provide additional information. Paired and joint univariate nonnested tests of a null model against both single and multiple alternatives have been discussed at length in the literature, whereas virtually no attention has been paid to either paired or joint multivariate non-nested tests. This paper shows how some multivariate non-nested tests can be derived from their univariate counterparts, and examines how to use these tests empirically to compare alternative factor demand systems. The empirical application involves the classical Berndt- Khaled annual data set for the U.S. manufacturing sector over the period 1947-1971. A statistically adequate empirical specification is determined for each competing factor demand system. The empirical results are interpreted for each system, and the models are compared on the basis of multivariate paired and joint non-nested procedures.
|Date of creation:||Jun 2001|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.iser.osaka-u.ac.jp/index-e.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- MacKinnon, James G. & White, Halbert & Davidson, Russell, 1983.
"Tests for model specification in the presence of alternative hypotheses : Some further results,"
Journal of Econometrics,
Elsevier, vol. 21(1), pages 53-70, January.
- Russell Davidson & James G. MacKinnon, 1981. "Tests for Model Specification in the Presence of Alternative Hypotheses: Some Further Results," Working Papers 430, Queen's University, Department of Economics.
- W. Erwin Diewert & T.J. Wales, 1989.
"Flexible Functional Forms and Global Curvature Conditions,"
NBER Technical Working Papers
0040, National Bureau of Economic Research, Inc.
- Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
- Michael McAleer, 1981. "Exact Tests of a Model Against Non-Nested Alternatives," Working Papers 431, Queen's University, Department of Economics.
- Barten, A.P. & McAleer, M., 1991.
"Comparing the Empirical Performance of Alternative Demand Systems,"
1991-2, Tilburg University, Center for Economic Research.
- Barten, A.P. & Mcaleer, M., 1991. "Comparing The Empirical Perfomance Of Alternative Demand Systems," Papers 9002a, Tilburg - Center for Economic Research.
- Barten, A.P. & McAleer, M., 1991. "Comparing the Empirical Performance of Alternative Demand Systems," Papers 9102, Tilburg - Center for Economic Research.
- Edward R. Morey, 1986. "An Introduction to Checking, Testing, and Imposing Curvature Properties: The True Function and the Estimated Function," Canadian Journal of Economics, Canadian Economics Association, vol. 19(2), pages 207-35, May.
- Berndt, Ernst R. & Christensen, Laurits R., 1973. "The translog function and the substitution of equipment, structures, and labor in U.S. manufacturing 1929-68," Journal of Econometrics, Elsevier, vol. 1(1), pages 81-113, March.
- Berndt, Ernst R & Wood, David O, 1975. "Technology, Prices, and the Derived Demand for Energy," The Review of Economics and Statistics, MIT Press, vol. 57(3), pages 259-68, August.
- Davidson, Russell & MacKinnon, James G, 1981.
"Several Tests for Model Specification in the Presence of Alternative Hypotheses,"
Econometric Society, vol. 49(3), pages 781-93, May.
- Russell Davidson & James G. MacKinnon, 1980. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Working Papers 378, Queen's University, Department of Economics.
- McFadden, Daniel, 1978. "The General Linear Profit Function," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.), Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 5 McMaster University Archive for the History of Economic Thought.
- 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.
When requesting a correction, please mention this item's handle: RePEc:dpr:wpaper:0543. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fumiko Matsumoto)
If references are entirely missing, you can add them using this form.