We propose a Laplace stochastic frontier model as an alternative to the traditional model with normal errors. An interesting feature of the Laplace model is that the distribution of inefficiency conditional on the composed error is constant for positive values of the composed error, but varies...

This paper studies the identification and estimation of treatment response with heterogeneous spillovers in a network model. We generalize the standard linear-in-means model to allow for multiple groups with between and within-group interactions. We provide a set of identification conditions of...

We consider a production function model that transforms worker inputs into outputs through peer effect networks. The distinguishing features of this production model are that the network is formal and observable through worker scheduling, and selection into the network is done by a manager. We...

This paper sets up a nested random effects spatial autoregressive panel data model to explain annual house price variation for 2000-2007 across 353 local authority districts in England. The estimation problem posed is how to allow for the endogeneity of the spatial lag variable producing the...

The U.S. income tax badly needs reform. It is complex, unfair, and inefficient. It doesn’t come close to raising enough revenue to finance government expenditures, and won’t any time in the foreseeable future unless it is revised. Raising tax rates could increase revenues, but it wouldn’t...

This paper studies the effect of hospital ownership on treatment rates allowing for spatial correlation among hospitals. Competition among hospitals and knowledge spillovers generate significant externalities which we try to capture using the spatial Durbin model. Using a panel of 2342 hospitals...

In the stochastic frontier model we extend the multivariate probability statements of Horrace (2005) to calculate the conditional probability that a firm is any particular efficiency rank in the sample. From this we construct the conditional expected efficiency rank for each firm. Compared to...

The standard LM tests for spatial dependence in linear and panel regressions are derived under the normality and homoskedasticity assumptions of the regression disturbances. Hence, they may not be robust against non-normality or heteroskedasticity of the disturbances. Following Born and Breitung...

We analyze peer effects in sleeping behavior using a representative sample of U.S. teenagers from the National Longitudinal Survey of Adolescent Health. The sampling design of the survey causes the conventional 2SLS estimator to be inconsistent. We extend the NLS estimator in Wang and Lee...

In parametric stochastic frontier models, the composed error is specified as the sum of a two-sided noise component and a one-sided inefficiency component, which is usually assumed half-normal, implying that the error distribution is skewed in one direction. In practice, however, estimation...