Parametric Decomposition of Output Growth: An Input-Distance Function Approach

The objective of this paper is to develop a tractable approach for recovering and quantifying all sources of TFP changes (namely, technical change, changes in technical and allocative efficiency, and scale economies) from the econometric estimation of an input distance function which also fully describes the production technology. The proposed theoretical framework relies on Bauer’s TFP decomposition framework and the duality between input distance and cost functions. Hence, instead of using a system approach to estimate a cost frontier, all necessary information for decomposing TFP changes are recovered from its dual counterpart.

[1]  Shawna Grosskopf,et al.  Budget-Constrained Frontier Measures of Fiscal Equality and Efficiency in Schooling , 1997, Review of Economics and Statistics.

[2]  Sergio Perelman,et al.  Technical efficiency of European railways: a distance function approach , 2000 .

[3]  Badi H. Baltagi,et al.  A General Index of Technical Change , 1988, Journal of Political Economy.

[4]  Rolf Färe,et al.  Measuring the technical efficiency of production , 1978 .

[5]  Shawna Grosskopf,et al.  FISCAL STRESS AND THE PRODUCTION OF PUBLIC SAFETY - A DISTANCE FUNCTION-APPROACH , 1995 .

[6]  Vangelis Tzouvelekas,et al.  Technical Efficiency, Technological Change and Output Growth of Wheat Farms in Saskatchewan , 1999 .

[7]  R. Färe,et al.  Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries , 1994 .

[8]  C. Lovell,et al.  Estimating stochastic production and cost frontiers when technical and allocative inefficiency are correlated , 1980 .

[9]  K. Kalirajan,et al.  A Decomposition of Total Factor Productivity Growth: The Case of Chinese Agricultural Growth Before and after Reforms , 1996 .

[10]  Catherine J. Morrison Paul,et al.  Efficiency in New Zealand Sheep and Beef Farming: The Impacts of Regulatory Reform , 2000, Review of Economics and Statistics.

[11]  Yanrui Wu.  Productivity Growth, Technological Progress, and Technical Efficiency Change in China: A Three-Sector Analysis1 , 1995 .

[12]  Scott E. Atkinson,et al.  Estimating Radial Measures of Productivity Growth: Frontier vs Non-Frontier Approaches , 1998 .

[13]  Sergio Perelman,et al.  A comparison of parametric and non-parametric distance functions: With application to European railways , 1999, Eur. J. Oper. Res..

[14]  S. Fan.  Effects Of Technological Change And Institutional Reform On Production Growth In Chinese Agriculture , 1991 .

[15]  C. Lovell,et al.  Stochastic Frontier Analysis: Frontmatter , 2000 .

[16]  Robin C. Sickles,et al.  Specification of Distance Functions Using Semi- and Nonparametric Methods with an Application to the Dynamic Performance of Eastern and Western European Air Carriers , 2002 .

[17]  Munir Ahmad,et al.  An econometric decomposition of dairy output growth , 1995 .

[18]  H. Bruton.  Total Factor Productivity Growth , 1995 .

[19]  P. Schmidt,et al.  Production frontiers with cross-sectional and time-series variation in efficiency levels , 1990 .

[20]  R. Färe,et al.  A distance function approach to price efficiency , 1990 .

[21]  K. Kalirajan,et al.  Sources of output growth in Indian agriculture , 1997 .

[22]  Adrian Pagan,et al.  The Lagrange Multiplier Test and its Applications to Model Specification in Econometrics , 1980 .

[23]  G. Karagiannis,et al.  Measuring technical, allocative and cost efficiencies of seabass and seabream farms in Greece , 2000 .

[24]  Boris E. Bravo-Ureta,et al.  Dairy Farm Efficiency Measurement Using Stochastic Frontiers and Neoclassical Duality , 1991 .

[25]  L. Tauer.  Productivity of New York Dairy Farms Measured by Nonparametric Malmquist Indices , 1998 .

[26]  H. Kim.  Functional Separability and Elasticities of Complementarity , 1997 .

[27]  R. Kopp.  The Measurement of Productive Efficiency: A Reconsideration , 1981 .

[28]  Rolf Färe,et al.  Scale economies and duality , 1986 .

[29]  Subal C. Kumbhakar,et al.  Estimation and decomposition of productivity change when production is not efficient: a paneldata approach , 2000 .

[30]  S. Kumbhakar,et al.  Decomposing Technical Change with Panel Data: An Application to the Public Sector* , 1995 .

[31]  D. Primont,et al.  The opportunity cost of duality , 1996 .

[32]  Bruno Bosco,et al.  Excess-input expenditure estimated by means of an input-distance function: the case of public railways , 1996 .

[33]  C. A. Knox Lovell,et al.  Applying efficiency measurement techniques to the measurement of productivity change , 1996 .

[34]  Paul W. Bauer,et al.  Decomposing TFP growth in the presence of cost inefficiency, nonconstant returns to scale, and technological progress , 1990 .

[35]  M. Farrell.  The Measurement of Productive Efficiency , 1957 .

[36]  Subal C. Kumbhakar,et al.  Stochastic frontier analysis , 2000 .