Robust Error Specification in a Production System

16 Pages Posted: 15 Apr 2020

See all articles by Rulon D. Pope

Rulon D. Pope

Brigham Young University

Jeffrey T. LaFrance

University of California, Berkeley

Date Written: April 2013

Abstract

Economists estimating demand and supply systems face the question of using shares or quantities as dependent variables. This article finds that inconsistent estimates are obtained if one makes the wrong choice. A robust structure is presented to let the data choose the preferred form. Empirical applications to U.S. and Texas agriculture using the generalized method of moments suggest that shares and quantities are rejected in favor of a more general functional form. The Texas application provides some evidence for fixed capital but not for labor.

Keywords: netputs, robust estimation

Suggested Citation

Pope, Rulon D. and LaFrance, Jeffrey T., Robust Error Specification in a Production System (April 2013). American Journal of Agricultural Economics, Vol. 95, Issue 3, pp. 669-684, 2013, Available at SSRN: https://ssrn.com/abstract=3573043 or http://dx.doi.org/10.1093/ajae/aas136

Rulon D. Pope (Contact Author)

Brigham Young University

Provo, UT 84602
United States

Jeffrey T. LaFrance

University of California, Berkeley ( email )

207 Giannini Hall / MC 3310
Berkeley, CA 94720
United States
510-643-5416 (Phone)
510-643-8911 (Fax)

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