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Technical inefficiency and public capital in US States: A stochastic frontier approach

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    This paper estimates a translog stochastic frontier production function in the analysis of all 48 contiguous U.S. states in the period 1970-1983, to attempt to measure and explain changes in technical efficiency. The model allows technical inefficiency to vary over time, and inefficiency effects to be a function of a set of explanatory variables in which the level and composition of public capital plays an important role. Results indicated that U.S. state inefficiency levels were significantly and positively correlated with the ratio of public capital to private capital. The proportion of public capital devoted to highways is negatively correlated with technical inefficiency, suggesting that not only the level but also the composition of public capital influenced state efficiency.

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    File URL: https://econ-papers.upf.edu/papers/451.pdf
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    Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 451.

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    Date of creation: Mar 2000
    Handle: RePEc:upf:upfgen:451
    Contact details of provider: Web page: http://www.econ.upf.edu/

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