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Efficiency Measurement

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Presentation on theme: "Efficiency Measurement"— Presentation transcript:

1 Efficiency Measurement
William Greene Stern School of Business New York University

2 Lab Session 5 Panel Data

3 Group Size Variables for Unbalanced Panels
Farm Milk Cows FarmPrds 1 23.3 10.7 3 10.6 25 9.4 2 19.6 11 22.2 24.7 4 25.4 12 25.3 13.5 26.1 14.5 55.4 22 63.5

4 Creating a Group Size Variable
Requires an ID variable (such as FARM) (1) Set the full sample exactly as desired (2) SETPANEL ; Group = the id variable ; Pds = the name you want limdep to use for the periods variable $ SETPANEL ; Group = farm ; pds = ti $

5 Application to Spanish Dairy Farms
N = 247 farms, T = 6 years ( ) Input Units Mean Std. Dev. Minimum Maximum Milk Milk production (liters) 131,108 92,539 14,110 727,281 Cows # of milking cows 2.12 11.27 4.5 82.3 Labor # man-equivalent units 1.67 0.55 1.0 4.0 Land Hectares of land devoted to pasture and crops. 12.99 6.17 2.0 45.1 Feed Total amount of feedstuffs fed to dairy cows (tons) 57,941 47,981 3,924.14 376,732

6 Exploring a Panel Data Set: Dairy
REGRESS ; Lhs = YIT ; RHS = COBBDGLS ; PANEL $ ; PANEL ; Het = Group $

7 Initiating a Panel Data Model

8 Nonlinear Panel Data Models
MODEL NAME ; Lhs = … ; RHS = … ; Panel ; … any other model parts … $ ALL PANEL DATA MODEL COMMANDS ARE THE SAME

9 Panel Data Frontier Model Commands
FRONTIER ; LHS = … [ ; COST ] ; RHS = … [; EFF = …] ; Panel ; ... the rest of the model ; any other options $

10 Pitt and Lee Random Effects
FRONTIER ; LHS = … [ ; COST ] ; RHS = … [; EFF = …] ; Panel ; any other options $ This is the default panel model.

11 Pitt and Lee Model

12 FRONTIER ; LHS = … [ ; COST ] ; RHS = … [; EFF = …] ; Panel
Pitt and Lee Random Effects with Heteroscedasticity and Time Invariant Inefficiency FRONTIER ; LHS = … [ ; COST ] ; RHS = … [; EFF = …] ; Panel ; HET ; HFU = … ; HFV = … $

13 FRONTIER ; LHS = … [ ; COST ] ; RHS = … [; EFF = …] ; Panel
Pitt and Lee Random Effects with Heteroscedasticity and Truncation Time Invariant Inefficiency FRONTIER ; LHS = … [ ; COST ] ; RHS = … [; EFF = …] ; Panel ; HET ; HFU = … ; HFV = … ; MODEL = T ; RH2 = One,… $

14 FRONTIER ; LHS = … [ ; COST ] ; RHS = … [; EFF = …] ; Panel
Pitt and Lee Random Effects with Heteroscedasticity Time Invariant Inefficiency FRONTIER ; LHS = … [ ; COST ] ; RHS = … [; EFF = …] ; Panel ; HET ; HFU = … ; HFV = … $

15 Schmidt and Sickles Fixed Effects
REGRESS ; LHS = … ; RHS = … ; PANEL ; PAR ; FIXED $ CREATE ; AI = ALPHAFE ( id ) $ CALC ; MAXAI = Max(AI) $ CREATE ; UI = MAXAI – AI $ (Use Minimum and AI – MINAI for cost)

16 True Random Effects Time Varying Inefficiency
FRONTIER ; LHS = … [ ; COST ] ; RHS = … $ FRONTIER ; LHS = … [ ; COST ] ; RHS = … ; Panel ; Halton (a good idea) ; PTS = number for the simulations ; RPM ; FCN = ONE (n) ; EFF = … $ Note, first and second FRONTIER commands are identical. This sets up the starting values.

17 True Fixed Effects Time Varying Inefficiency
FRONTIER ; LHS = … [ ; COST ] ; RHS = … $ FRONTIER ; LHS = … [ ; COST ] ; RHS = … ; Panel ; FEM ; EFF = … $ Note, first and second FRONTIER commands are identical. This sets up the starting values.

18 Battese and Coelli Time Varying Inefficiency
FRONTIER ; LHS = … [ ; COST ] ; RHS = … ; Panel ; MODEL = BC ; EFF = … $ This is the default specification, u(i,t) = exp[h(t-T)] |U(i)| To use the extended specification, u(i,t)=exp[d’z(i)] |U(i)| ; Het ; HFU = variables

19 Other Models There are many other panel models with time varying and time invariant inefficiency, heteroscedasticity, heterogeneity, etc. Latent class, Random parameters Sample selection, And so on….


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