A Spatial Stochastic Frontier Model with Spillovers: Evidence for Italian Regions

15 Pages Posted: 3 Jun 2016

See all articles by Efthymios G. Tsionas

Efthymios G. Tsionas

Lancaster University

Panayotis Michaelides

National Technical University of Athens (NTUA)

Date Written: July 2016

Abstract

Efficiency measurement using stochastic frontier models is well established in applied econometrics. However, no published work seems to be available on efficiency analysis using spatial data dealing with possible spatial dependence between regions. This article considers a stochastic frontier model with decomposition of inefficiency into an idiosyncratic and a spatial, spillover component. Exact posterior distributions of parameters are derived, and computational schemes based on Gibbs sampling with data augmentation are proposed to conduct simulation‐based inference and efficiency measurement. The new method is illustrated using production data for Italian regions (1970–1993). Clearly, further theoretical and empirical research on the subject would be of great interest.

Suggested Citation

Tsionas, Efthymios G. and Michaelides, Panayotis, A Spatial Stochastic Frontier Model with Spillovers: Evidence for Italian Regions (July 2016). Scottish Journal of Political Economy, Vol. 63, Issue 3, pp. 243-257, 2016. Available at SSRN: https://ssrn.com/abstract=2788302 or http://dx.doi.org/10.1111/sjpe.12081

Efthymios G. Tsionas (Contact Author)

Lancaster University ( email )

Lancaster LA1 4YX
United Kingdom

Panayotis Michaelides

National Technical University of Athens (NTUA) ( email )

Athens
Greece

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