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Modified Fixed Effects Estimation of Technical Inefficiency
Dalarna University, School of Technology and Business Studies, Statistics. Swedish University of Agricultural Sciencies.ORCID iD: 0000-0003-4378-9593
2013 (English)Report (Other academic)
Abstract [en]

We consider method of moment fixed effects (FE) estimation of technical inefficiency. When N, the number of cross sectional observations, is large it ispossible to obtain consistent central moments of the population distribution of the inefficiencies. It is well-known that the traditional FE estimator may be seriously upward biased when N is large and T, the number of time observations, is small. Based on the second central moment and a single parameter distributional assumption on the inefficiencies, we obtain unbiased technical inefficiencies in large N settings. The proposed methodology bridges traditional FE and maximum likelihood estimation – bias is reduced without the random effects assumption.

Place, publisher, year, edition, pages
Borlänge: Högskolan Dalarna , 2013. , 10 p.
Working papers in transport, tourism, information technology and microdata analysis, ISSN 1650-5581 ; 2013: 21
Keyword [en]
Technical output inefficiency, Fixed effects estimator, Panel data, Method of moments
National Category
Research subject
Komplexa system - mikrodataanalys
URN: urn:nbn:se:du-12793OAI: diva2:642647
Available from: 2013-08-22 Created: 2013-08-22 Last updated: 2015-04-17Bibliographically approved

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Wikström, Daniel
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