On the Choice of Functional Forms

Appelbaum, Elie

doi:10.2307/2526492

Cited by 74 publications

(24 citation statements)

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“…In this paper, we use an alternative functional formthe generalized Leontief cost function (a nonlinear extension of the Leontief function) proposed by Diewert. The generalized Leontief function has primarily been used in empirical work for study of cost with a single output [11][12][13], but seldom used for empirical analysis with multiple outputs even though it was extended to the case with multiple outputs in 1973 [14].…”

Section: Introductionmentioning

confidence: 99%

Estimating hospital costs with a generalized Leontief function

Rosenman

2001

Health Economics

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This paper estimates a long-run hospital cost function with multiple outputs and inputs using a panel data set from Washington State hospitals during 1988-1993. We find that with our data the generalized Leontief function is more appropriate than a translog for estimating hospital cost functions. With respect to hospital costs, we find that hospitals readily adjust the use of intermediate products. Radiology, therapies and surgery, and other inpatient days, all serve as substitutes for core inpatient days. Outpatient services are found to be complementary to core inpatient services, indicating that the growth of stand-alone outpatient clinics might increase the costs of providing healthcare services. Our analysis finds that hospitals show significant economies of scale, but there is a limited amount of evidence of scope economies. Also, there is some evidence that profit-seeking hospitals achieve some of their goals by controlling costs, and that diagnostically related groups (DRG)-based Medicare services are effective in getting hospitals to control costs.

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Section: Introductionmentioning

confidence: 99%

Estimating hospital costs with a generalized Leontief function

Rosenman

2001

Health Economics

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“…Our modification continues to allow this important nested test, as well as the nested testing of several more functional forms through appropriate modifications of b, D, u α , ν α , λ, and δ. They include the TLF, translog, Generalized Box-Cox, linear, normalized quadratic, generalized Leontief, modified resistance, non-homothetic CES (Applebaum 1979), logarithmic and Cobb-Douglas. 5 The parametric restrictions required to produce these functional forms are listed in Table 1.…”

Section: Methodsmentioning

confidence: 99%

Reducing Approximation Error in the Fourier Flexible Functional Form

Skolrud

2017

Econometrics

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Abstract:The Fourier Flexible form provides a global approximation to an unknown data generating process. In terms of limiting function specification error, this form is preferable to functional forms based on second-order Taylor series expansions. The Fourier Flexible form is a truncated Fourier series expansion appended to a second-order expansion in logarithms. By replacing the logarithmic expansion with a Box-Cox transformation, we show that the Fourier Flexible form can reduce approximation error by 25% on average in the tails of the data distribution. The new functional form allows for nested testing of a larger set of commonly implemented functional forms.

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“…I consider the data generating processes I introduce to be likely alternatives in a world where CES and translog functions are plausible descriptions of potential paths of growth and income distribution. A function that encompasses both the CES and the translog function as special cases is the generalized Box-Cox function (Appelbaum (1979)). When constant returns and symmetry are imposed, it can be described intuitively in the following way: It consists of two additive components, one is the CES function, the other is the collection of quadratic terms that yield a translog function if added to a Cobb-Douglas function.…”

Section: General Approachmentioning

confidence: 99%

“…Factor-augmenting technology is assumed to deviate from its trend by shocks ΓK and ΓN . The actual levels of technology are thus: Appelbaum (1979) specifies a function that encompasses both the CES and the translog function as special cases: the generalized Box-Cox transformation. In order to focus on capital-deepening versus directed technical change, I assume that linear homogeneity and the constancy of rates of factor-augmenting technical change are known.…”

Section: General Approachmentioning

confidence: 99%

“…One way of identifying the direction of technical change is obviously to impose a particular functional form. Some empirical studies, like the early contribution by Appelbaum (1979), on which the Box-Cox function used in this paper is based, use econometric testing to discriminate between general and restricted functional forms. But in applied macroeconomic research a common practice which hypotheses to test and how to assess the power of the test under typical circumstances has not been established.…”

Section: Introductionmentioning

confidence: 99%

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The Identification of Directed Technical Change Revisited

Saam

2014

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.

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On the Choice of Functional Forms

Cited by 74 publications

References 1 publication

Estimating hospital costs with a generalized Leontief function

Estimating hospital costs with a generalized Leontief function

Reducing Approximation Error in the Fourier Flexible Functional Form

The Identification of Directed Technical Change Revisited

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