Research seminar by Subal Kumbhakar (State University of New York – Binghamton): «Primal Production Models: A Synthesis of Specification and Estimation Issues»
Friday, May 21 ICEF held the Research seminar.
Lecturer: Subal Kumbhakar (State University of New York – Binghamton)
Theme: «Primal Production Models: A Synthesis of Specification and Estimation Issues»
Abstract: This paper shows that various popular primal production models such as the production function, input distance function and input requirement function are algebraically equivalent in the sense that they can be derived from the same underlying transformation (production possibility) function. By assuming that producers maximize profit, we show that OLS gives inconsistent estimates irrespective of whether the production, input distance and input requirement functions are used. Based on several specifications of the production and input distance function models, we conclude that one can estimate the input elasticities and returns to scale consistently using instruments on only one regressor. No instruments are needed if a system approach is used. We used Norwegian timber harvesting data to illustrate workings of various model specifications.
Venue: Pokrovski Bulvar, 11, Room D-318