Imposing regularity conditions on a system of cost and factor share equations

Griffiths, William E.; O’Donnell, Christopher J.; Cruz, Agustina Tan

doi:10.1111/1467-8489.00101

Cited by 59 publications

(36 citation statements)

References 30 publications

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“…As in the former case, the objective is to ensure that Hp (respectively Hx ) is positive semi-definite (respectively negative semi-definite) at the observation date 1 t (respectively 2 t ), with 12 tt . The input and output share equations (3) and (4) Following the same procedure as for the imposition of curvature restrictions at the same date, we can write, using (9) and (14), the convexity restrictions as:…”

Section: Imposing Curvature Condition At Different Observation Datesmentioning

confidence: 99%

“…However, the gains from searching for the optimal combination of date may not be worth the effort given the small difference in total violations between the "best" date along the diagonal and the "best" date off the diagonal. 12 We chose to present the results for the period 1970 to 1980 because the results for 1981 to 2007 provide similar 17…”

Section: R Is Computed As In Mcelroy (1977)mentioning

confidence: 99%

“…As such, the curvature property is not 3 imposed ex-ante. Griffiths et al (2000) and Lariviere et al (2000) also used a Bayesian estimation to investigate the impact of regularity (monotonicity + curvature) conditions on the signs and magnitudes of elasticities. 3 Even though Kohli (1991) is a well-known contribution, few papers discuss curvature conditions in the context of the GNP function (see Kohli (1992Kohli ( , 1993 and Tombazos (2003)).…”

Section: Introductionmentioning

confidence: 99%

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Imposing Curvature Conditions on Flexible Functional Forms for GNP Functions

Nana

Larue

2012

SSRN Journal

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Abstract:This paper empirically investigates the implications of the imposition of convexity in output prices and concavity in factor endowments on flexible functional forms for the GNP function. Using macroeconomic data for Switzerland, we estimate the Translog and the Symmetric Normalized Quadratic forms to investigate the manner with which curvature restrictions are imposed, the extend of curvature violations and the robustness of estimated elasticities. We also compare the predictive accuracy of the aforementioned flexible functional forms. Our result show that concavity in factor endowments is violated much more often than convexity in output prices. For the Translog, the date at which local restrictions are imposed matters a great deal in terms of remaining curvature violations in the sample, but far less for estimated elasticities. In contrast, we found that the size and sign of elasticities vary across functional forms. In-sample forecasting analysis demonstrates that the Translog model significantly dominates the Symmetric Normalized Quadratic. Keywords: GNP function, flexible functional forms, curvature violations, elasticitiesClassification JEL: D24, C30 Résumé:Ce papier analyse empiriquement l'impact de l'imposition de la convexité dans le prix des biens produits et de la concavité dans les quantités de facteurs de production sur l'estimation des formes fonctionnelles flexibles dans le cadre des fonctions de Produit National Brut (PNB). En utilisant les données macroéconomiques de la Suisse, nous estimons les formes fonctionnelles Translog et Quadratique Symétrique Normalisée avec et sans imposition des conditions de courbures, et enquêtons sur l'étendue de la violation des restrictions et la robustesse des élasticités estimées. Nous évaluons également la capacité prédictive intra-échantillon des deux formes fonctionnelles. Nos résultats montrent que la concavité dans la dotation en facteurs est violée plus souvent que la convexité dans le prix des biens produits. Pour la Translog, la date à laquelle les restrictions locales sont imposées a un impact important sur le nombre de violations des conditions de courbure et cela sur l'ensemble de l'échantillon, mais a peu d'influence sur les élasticités estimées. En revanche, nous avons constaté que la taille et le signe des élasticités varient selon les deux formes fonctionnelles. L'analyse du pouvoir prédictif intra-échantillon montre que la forme Translog domine nettement la Quadratique Symétrique Normalisée.

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Section: Imposing Curvature Condition At Different Observation Datesmentioning

confidence: 99%

Section: R Is Computed As In Mcelroy (1977)mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Imposing Curvature Conditions on Flexible Functional Forms for GNP Functions

Nana

Larue

2012

SSRN Journal

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“…Using the general cost of production model (GECOM [17]), Kleinhanss et al [18] and Tiberti [19]) estimates input-output coefficients. Moxey and Tiffin [20], and Griffiths et al [21] use constraint estimations for input-output coefficients and cost shares of inputs, respectively. Desbois et al [22] apply quantile regressions to estimate the cost of plant protection per hectare and per Euro 1000.-of turnover for crop enterprises.…”

Section: Introductionmentioning

confidence: 99%

Disproportionate Allocation of Indirect Costs at Individual-Farm Level Using Maximum Entropy

Lips

2017

Entropy

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This paper addresses the allocation of indirect or joint costs among farm enterprises, and elaborates two maximum entropy models, the basic CoreModel and the InequalityModel, which additionally includes inequality restrictions in order to incorporate knowledge from production technology. Representing the indirect costing approach, both models address the individual-farm level and use standard costs from farm-management literature as allocation bases. They provide a disproportionate allocation, with the distinctive feature that enterprises with large allocation bases face stronger adjustments than enterprises with small ones, approximating indirect costing with reality. Based on crop-farm observations from the Swiss Farm Accountancy Data Network (FADN), including up to 36 observations per enterprise, both models are compared with a proportional allocation as reference base. The mean differences of the enterprise's allocated labour inputs and machinery costs are in a range of up to ±35% and ±20% for the CoreModel and InequalityModel, respectively. We conclude that the choice of allocation methods has a strong influence on the resulting indirect costs. Furthermore, the application of inequality restrictions is a precondition to make the merits of the maximum entropy principle accessible for the allocation of indirect costs.

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“…The literature on MCMC is extensive; for a general appreciation of its scope and purpose, see Tierney (1994), Albert and Chib (1996), Chen et al (2000), Chib and Greenberg (1996), Gilks et al (1996), Tanner (1996), and the chapter by Geweke et al (this volume). For application of MCMC to the SUR model, see, for example, Percy (1992,1996), Chib and Greenberg (1995), Griffiths and Chotikapanich (1997) and Griffiths et al (2000).…”

Section: Introductionmentioning

confidence: 99%

Bayesian Inference in the Seemingly Unrelated Regressions Model

Griffiths¹

2003

Computer-Aided Econometrics

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Imposing regularity conditions on a system of cost and factor share equations

Cited by 59 publications

References 30 publications

Imposing Curvature Conditions on Flexible Functional Forms for GNP Functions

Imposing Curvature Conditions on Flexible Functional Forms for GNP Functions

Disproportionate Allocation of Indirect Costs at Individual-Farm Level Using Maximum Entropy

Bayesian Inference in the Seemingly Unrelated Regressions Model

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