The availability of efficiency estimation software -freely distributed via the internet and relatively easy to use -recently inflated the number of corresponding applications. The resulting efficiency estimates are used without a critical assessment with respect to the literature on theoretical consistency, flexibility and the choice of the appropriate functional form. The robustness of policy suggestions based on inferences from efficiency measures nevertheless crucially depends on theoretically well-founded estimates. This paper adresses stochastic efficiency measurement by critically reviewing the theoretical consistency of recently published technical efficiency estimates. The results confirm the need for a posteriori checking the regularity of the estimated frontier by the researcher and, if necessary, the a priori imposition of the theoretical requirements. JEL classification codes: C51, D24, Q12

Over the last two decades, many countries around the world have been enthusiastically embarking on the path of decentralization. However, because of a preconceived idea that decentralization will automatically result in efficient allocation of public resources and due to the absence of an analytical framework and data, very little empirical work has been done in this area. Nor has much attention been given to an analysis of the factors enabling or constraining its outcomes. In this paper, we develop a theoretical model and use it to test empirically the impact of fiscal decentralization on rural infant mortality rates in India between 1990 and 1997. The random effect regression results show that fiscal decentralization plays a statistically significant role in reducing rural infant mortality rate and the results are robust. The results also show that the effectiveness of fiscal decentralization can be affected by other complementary factors such as the level of political decentralization.

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The partial welfare effects of alternative erosion control methods, banning insecticides, banning herbicides, and limiting nitrogen fertilizer in the Corn Belt are examined. The estimated welfare effects are partial since they reflect the change in consumers' plus producers' surplus arising from the production and consumption of corn, soybeans, wheat, oats, hay, and pasture but not the environmental benefits associated with pollution abatement or the administrative and enforcement cost of the policies. A large linear programming model of crop production in the Corn Belt was used to make the estimates.

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