A Simple Analytic Approximation Approach for Estimating the True Random Effects and True Fixed Effects Stochastic Frontier Models

2010 ◽  
Author(s):  
Wen-Jen Tsay ◽  
Peng-Hsuan Ke
Keyword(s):  
Random Effects ◽  
Fixed Effects ◽  
Stochastic Frontier ◽  
Analytic Approximation ◽  
Approximation Approach ◽  
Stochastic Frontier Models

scholarly journals Estimation of Stochastic Frontier Models with Fixed Effects through Monte Carlo Maximum Likelihood

2011 ◽  
Vol 2011 ◽  
pp. 1-13 ◽  
Author(s):  
Grigorios Emvalomatis ◽  
Spiro E. Stefanou ◽  
Alfons Oude Lansink
Keyword(s):  
Monte Carlo ◽  
Random Effects ◽  
Fixed Effects ◽  
Likelihood Function ◽  
Stochastic Frontier ◽  
General Context ◽  
Explanatory Variables ◽  
Monte Carlo Experiments ◽  
Incidental Parameters ◽  
Stochastic Frontier Models

Estimation of nonlinear fixed-effects models is plagued by the incidental parameters problem. This paper proposes a procedure for choosing appropriate densities for integrating the incidental parameters from the likelihood function in a general context. The densities are based on priors that are updated using information from the data and are robust to possible correlation of the group-specific constant terms with the explanatory variables. Monte Carlo experiments are performed in the specific context of stochastic frontier models to examine and compare the sampling properties of the proposed estimator with those of the random-effects and correlated random-effects estimators. The results suggest that the estimator is unbiased even in short panels. An application to a cross-country panel of EU manufacturing industries is presented as well. The proposed estimator produces a distribution of efficiency scores suggesting that these industries are highly efficient, while the other estimators suggest much poorer performance.

scholarly journals Entrepreneurial capability (EC) environment in ASEAN-05 emerging economies

2018 ◽  
Vol 12 (2) ◽  
pp. 206-221 ◽  
Author(s):  
Munshi Naser Ibne Afzal ◽  
Kasim Mansur ◽  
Umme Humayara Manni
Keyword(s):  
Fixed Effects ◽  
Negative Impact ◽  
Positive Impact ◽  
Stochastic Frontier ◽  
The Philippines ◽  
University Education ◽  
Positive Role ◽  
Content Type ◽  
Stochastic Frontier Models ◽  
Key Indicators

Purpose The entrepreneurial capability (EC) environment refers to the general social and economic settings of a given local/regional entrepreneurship environment. The primary purpose of this study is to uncover key indicators of the EC milieu and test these components empirically within the context of the Association of South East Asian Nations (ASEAN)-5 economies to elucidate the current state of their EC environments, at the regional and national levels. To this end, the aim of this study is twofold. First, this work endeavors to explicate the determinants of EC, with aims of elucidating its association to commercial opportunities in (ASEAN)-5 economies, namely, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Next, this study applies the developed theory, including the identified determinants of EC to empirically test the efficiency and imperative coefficients of variables that have an impact on perceived entrepreneurial capabilities within a given environment. Design/methodology/approach This research applies two frontier models, namely, the consistent estimation of fixed-effects and linear transformation stochastic frontier models, to assess the coefficients of significant EC variables for the panel sample. Data corresponding to the assessed variables were retrieved from the databases of the Global Entrepreneurship Monitor (GEM) – 2016 and the World Competitiveness Yearbook (WCY) – 2016, for the period, 2010-2016. Findings The attained results suggest that factors corresponding to the variables “Entrepreneurship as a good career choice” and “perceived opportunities” have played a significantly positive role on the EC environment of ASEAN 05, although findings suggest both factors may still be improved upon. Conversely, the “fear of failure rate” factor was shown to have exerted a negative impact on the efficiency of the EC environment of ASEAN 05. Other important variables – such as intellectual property rights, university education and knowledge transfer rate – were shown to generate a positive impact on the EC environment of these economies. Originality/value This study makes an important contribution to the entrepreneurship literature and can stimulate policymakers to rethink the EC settings of ASEAN-05 in their pursuit of an innovation-driven region.

scholarly journals Do subsidies drive technical efficiency? The case of portuguese firms in the agribusiness sector

2020 ◽  
Vol 58 (3) ◽  
Author(s):  
Silvia Ferreira Marques Salustiano ◽  
Natália Barbosa ◽  
Tito Belchior Silva Moreira
Keyword(s):  
Technical Efficiency ◽  
Fixed Effects ◽  
Empirical Studies ◽  
Stochastic Frontier ◽  
The European Union ◽  
Policy Makers ◽  
Average Efficiency ◽  
The Public ◽  
Stochastic Frontier Models

Abstract: Successive reforms in the Common Agricultural Policy (CAP), enlargements of the European Union (EU) and pressures in the public budget increase the need for empirical studies to assess the role of subsidies in shaping firms’ performance and, hence, to support policy-makers decisions and decision-making in the productive sector. This paper assesses whether subsidies affect the technical efficiency of 1,943 Portuguese agribusiness firms over 2007-2015. By applying stochastic frontier models and fixed-effects models, to calculate the average efficiency of these firms, the results show different effects of subsidies among agribusiness sectors. The stochastic frontier model revealed that the subsidies have a positive and significant impact on the technical efficiency of three sectors, animal production, manufacture of food, and manufacture of paper. Further, except for firms in the forestry and logging sector, Portuguese agribusiness firms had higher average efficiency levels when subsidised, which provides evidence that subsidies could be important and contribute positively to the technical efficiency of Portuguese firms.

scholarly journals A random effects population dynamics model based on proportions-at-age and removal data for estimating total mortality

2012 ◽  
Vol 69 (11) ◽  
pp. 1881-1893 ◽  
Author(s):  
Verena M. Trenkel ◽  
Mark V. Bravington ◽  
Pascal Lorance
Keyword(s):  
Population Dynamics ◽  
Random Effects ◽  
Fixed Effects ◽  
Random Effect ◽  
Total Mortality ◽  
Estimation Bias ◽  
Effective Sample Size ◽  
Dynamics Model ◽  
Population Dynamics Model ◽  
Study Parameter

Catch curves are widely used to estimate total mortality for exploited marine populations. The usual population dynamics model assumes constant recruitment across years and constant total mortality. We extend this to include annual recruitment and annual total mortality. Recruitment is treated as an uncorrelated random effect, while total mortality is modelled by a random walk. Data requirements are minimal as only proportions-at-age and total catches are needed. We obtain the effective sample size for aggregated proportion-at-age data based on fitting Dirichlet-multinomial distributions to the raw sampling data. Parameter estimation is carried out by approximate likelihood. We use simulations to study parameter estimability and estimation bias of four model versions, including models treating mortality as fixed effects and misspecified models. All model versions were, in general, estimable, though for certain parameter values or replicate runs they were not. Relative estimation bias of final year total mortalities and depletion rates were lower for the proposed random effects model compared with the fixed effects version for total mortality. The model is demonstrated for the case of blue ling (Molva dypterygia) to the west of the British Isles for the period 1988 to 2011.

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