In this paper we introduce technical efficiency via the intercept that evolve over time as a AR(1) process in a stochastic frontier (SF) framework in a panel data framework. Following are the distinguishing features of the model. First, the model is dynamic in nature. Second, it can separate...

This paper deals with (i) decomposing total factor productivity growth into input-specific components, (ii) measuring input-specific productivity/efficiency growth, and (iii) testing several neutrality hypotheses in technical change. These issues are addressed in a general framework without...

Limited budget for the purchase of variable inputs might adversely affect producer's input use decisions and might result in a non-optimal input usage. If expenditure constrains are present and binding, unconstrained profit-maximization is not valid for modelling producers' input use decisions....

In this article we propose a theoretical model for analyzing capital requirement in agricultural production and define excess capital thereupon. We develop a two-step method that allows endogenous regressors in the maximum likelihood estimation. The two-step procedure is also capably of...

SUMMARY This paper considers a panel data stochastic frontier model that disentangles unobserved firm effects (firm heterogeneity) from persistent (time‐invariant/long‐term) and transient (time‐varying/short‐term) technical inefficiency. The model gives us a four‐way error component...