SSE/EFI Working Paper Series in Economics and Finance
Subal C. Kumbhakar and Mickael Löthgren
A Monte Carlo Analysis of Technical Inefficiency Predictors
Abstract: This paper studies performance of both point and interval
predictors of technical inefficiency in the stochastic production frontier
model using a Monte Carlo experiment. In point prediction we use the
Jondrow et al. (1980) point predictor of technical inefficiency, while for
interval prediction the Horrace and Schmidt (1996) and Hjalmarsson et al.
(1996) results are used. When ML estimators are used we find negative bias
in point predictions. MSEs are found to decline as the sample size
increases. The mean empirical coverage accuracy of the confidence intervals
are significantly below the theoretical confidence level for all values of
the variance ratio.
Keywords: Bias; MSE; Point and Interval Estimators; Stochastic Production Frontier; (follow links to similar papers)
JEL-Codes: C15; D24; (follow links to similar papers)
10 pages, March 23, 1998
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