Modified fixed effects estimation of technical inefficiency

• We consider method-of-moments fixed effects (FE) estimation of technical inefficiency. When dealing with a large number of cross-sectional observations, N, it is possible to obtain consistent moment estimators of the inefficiency distribution. It is well known that the classical FE estimator may be seriously upward biased when N is large and T, the number of time observations, is small. The method-of-moments FE estimators do not suffer from this type of bias in large-N settings. The proposed methodology bridges classical FE and maximum likelihood estimation, leading to a reduction in bias without making the random effects assumption.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Företagsekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Business Administration (hsv//eng)

Nyckelord

Technical inefficiency

Fixed effects estimator

Method of moments

Complex Systems – Microdata Analysis

Komplexa system - mikrodataanalys

Publikations- och innehållstyp

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