RT Report
T1 Specification Testing of Production in a Stochastic Frontier Model
A1 Guo, Xu
A1 Li, Gao-Rong
A1 McAleer, Michael
A1 Wong, Wing-Keung
AB Parametric production frontier functions are frequently used in stochastic frontier models, but there do not seem to be any empirical test statistics for its plausibility. To bridge the gap in the literature, we develop two test statistics based on local smoothing and an empirical process, respectively. Residual-based wild bootstrap versions of these two test statistics are also suggested. The distributions of technical inefficiency and the noise term are not specified, which allows specification testing of the production frontier function even under heteroscedasticity. Simulation studies and a real data example are presented to examine the finite sample sizes and powers of the test statistics. The theory developed in this paper is useful for production mangers in their decisions on production.
PB Facultad de Ciencias Económicas y Empresariales. Instituto Complutense de Análisis Económico (ICAE)
SN 2341-2356
YR 2017
FD 2017
LK https://hdl.handle.net/20.500.14352/22929
UL https://hdl.handle.net/20.500.14352/22929
LA eng
DS Docta Complutense
RD 4 abr 2025