Adjustment of Inputs and Measurement of Time-Varying Technical Efficiency: A Dynamic Panel Data Analysis

Journal of Quantitative Economics (2014), Forthcoming

33 Pages Posted: 14 Jul 2014

See all articles by Aditi Bhattacharyya

Aditi Bhattacharyya

Sam Houston State University - College of Business Administration - Department of Economics and International Business

Date Written: 2012

Abstract

This paper provides estimation method to measure technical efficiency of production units and the speed of adjustment of output, both varying with time, from a dynamic stochastic production frontier that incorporates the sluggish adjustment of inputs. Using a panel dataset on private manufacturing establishments in Egypt, I find that the speed of adjustment of output is lower than unity in every period and slowly increases over time. When compared to the results from the static model, the dynamic model is found to produce higher estimates of technical efficiency on average, captures more variation in the time pattern of technical efficiency, and provides a different ranking of production units.

Keywords: adjustment of inputs, dynamic panel data models, stochastic production frontier, time-varying technical efficiency

JEL Classification: C23, D24, L60

Suggested Citation

Bhattacharyya, Aditi, Adjustment of Inputs and Measurement of Time-Varying Technical Efficiency: A Dynamic Panel Data Analysis (2012). Journal of Quantitative Economics (2014), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2465298

Aditi Bhattacharyya (Contact Author)

Sam Houston State University - College of Business Administration - Department of Economics and International Business ( email )

SHSU Box 2118
Huntsville, TX 77341-2118
United States

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