Open Access. Powered by Scholars. Published by Universities.®
Social and Behavioral Sciences Commons™
Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 5 of 5
Full-Text Articles in Social and Behavioral Sciences
A Time-Varying True Individual Effects Model With Endogenous Regressors, Levent Kutlu, Kien C. Tran, Mike G. Tsionas
A Time-Varying True Individual Effects Model With Endogenous Regressors, Levent Kutlu, Kien C. Tran, Mike G. Tsionas
Economics and Finance Faculty Publications and Presentations
We propose a fairly general individual effects stochastic frontier model, which allows both heterogeneity and inefficiency to change over time. Moreover, our model handles the endogeneity problems if either at least one of the regressors or one-sided error term is correlated with the two-sided error term. Our Monte Carlo experiments show that our estimator performs well. We employed our methodology to the US banking data and found a negative relationship between return on revenue and cost efficiency. Estimators ignoring time-varying heterogeneity or endogeneity did not perform well and gave very different estimates compared to our estimator.
A Distribution-Free Stochastic Frontier Model With Endogenous Regressors, Levent Kutlu
A Distribution-Free Stochastic Frontier Model With Endogenous Regressors, Levent Kutlu
Economics and Finance Faculty Publications and Presentations
We provide a guideline for estimating a distribution-free panel data stochastic frontier model in the presence of endogenous variables. In particular, we consider variations of the within estimator of Cornwell et al. (1990) to allow endogenous regressors.
School District Consolidation Policies: Endogenous Cost Inefficiency And Saving Reversals, Mustafa U. Karakaplan, Levent Kutlu
School District Consolidation Policies: Endogenous Cost Inefficiency And Saving Reversals, Mustafa U. Karakaplan, Levent Kutlu
Economics and Finance Faculty Publications and Presentations
Some education policy studies suggest that consolidation of public school districts saves resources. However, endogeneity in cost models would result in incorrect estimates of the effects of consolidation. We use a new stochastic frontier methodology to examine district expenditures while handling endogeneity. Using the data from California, we find that the effects of student achievement and education market concentration on expenditure per pupil are substantially larger when endogeneity is handled. Our findings are robust to concerns such as instrumental variable adequacy and spatial interactions. Our consolidation simulations indicate that failure to address endogeneity can result in unrealistic expectations of savings.
Endogeneity In Panel Stochastic Frontier Models: An Application To The Japanese Cotton Spinning Industry, Mustafa U. Karakaplan, Levent Kutlu
Endogeneity In Panel Stochastic Frontier Models: An Application To The Japanese Cotton Spinning Industry, Mustafa U. Karakaplan, Levent Kutlu
Economics and Finance Faculty Publications and Presentations
We present a panel stochastic frontier model that handles the endogeneity problem. This model can treat the endogeneity of both frontier and inefficiency variables. We apply our method to examine the technical efficiency of Japanese cotton spinning industry. Our results indicate that market concentration is endogenous, and when its endogeneity is properly handled, it has a larger negative impact on the technical efficiency of cotton spinning plants. We find that the exogenous model substantially overestimates efficiency in concentrated markets.
Battese-Coelli Estimator With Endogenous Regressors, Levent Kutlu
Battese-Coelli Estimator With Endogenous Regressors, Levent Kutlu
Economics and Finance Faculty Publications and Presentations
We provide a framework for dealing with the endogeneity problem in the Battese-Coelli estimator for productive efficiency measurement.