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Article: Production Function Estimation with Unobserved Input Price Dispersion
Title | Production Function Estimation with Unobserved Input Price Dispersion |
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Authors | |
Issue Date | 2016 |
Publisher | Wiley-Blackwell Publishing, Inc. The Journal's web site is located at http://www.wiley.com/bw/journal.asp?ref=0020-6598 |
Citation | International Economic Review, 2016, v. 57 n. 2, p. 665-690 How to Cite? |
Abstract | We propose a method to consistently estimate production functions in the presence of input price dispersion when intermediate input quantities are not observed. We find that the traditional approach to dealing with unobserved input quantities---using deflated expenditure as a proxy---substantially biases the production estimates. In contrast, our method controls for heterogeneous input prices by exploiting the first order conditions of the firm's profit maximization problem and consistently recovers the production function parameters. Using our preferred method, we provide empirical evidence of significant input price dispersion and even wider productivity dispersion than is estimated using proxy methods. |
Persistent Identifier | http://hdl.handle.net/10722/212050 |
ISSN | 2023 Impact Factor: 1.5 2023 SCImago Journal Rankings: 2.350 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Grieco, PLE | - |
dc.contributor.author | Li, S | - |
dc.contributor.author | Zhang, H | - |
dc.date.accessioned | 2015-07-21T02:20:58Z | - |
dc.date.available | 2015-07-21T02:20:58Z | - |
dc.date.issued | 2016 | - |
dc.identifier.citation | International Economic Review, 2016, v. 57 n. 2, p. 665-690 | - |
dc.identifier.issn | 0020-6598 | - |
dc.identifier.uri | http://hdl.handle.net/10722/212050 | - |
dc.description.abstract | We propose a method to consistently estimate production functions in the presence of input price dispersion when intermediate input quantities are not observed. We find that the traditional approach to dealing with unobserved input quantities---using deflated expenditure as a proxy---substantially biases the production estimates. In contrast, our method controls for heterogeneous input prices by exploiting the first order conditions of the firm's profit maximization problem and consistently recovers the production function parameters. Using our preferred method, we provide empirical evidence of significant input price dispersion and even wider productivity dispersion than is estimated using proxy methods. | - |
dc.language | eng | - |
dc.publisher | Wiley-Blackwell Publishing, Inc. The Journal's web site is located at http://www.wiley.com/bw/journal.asp?ref=0020-6598 | - |
dc.relation.ispartof | International Economic Review | - |
dc.rights | This is the accepted version of the following article: International Economic Review, 2016, v. 57 n. 2, p. 665-690, which has been published in final form at https://onlinelibrary.wiley.com/doi/abs/10.1111/iere.12172 | - |
dc.title | Production Function Estimation with Unobserved Input Price Dispersion | - |
dc.type | Article | - |
dc.identifier.email | Zhang, H: hszhang@hku.hk | - |
dc.identifier.authority | Zhang, H=rp01776 | - |
dc.description.nature | postprint | - |
dc.identifier.doi | 10.1111/iere.12172 | - |
dc.identifier.scopus | eid_2-s2.0-84964495096 | - |
dc.identifier.hkuros | 245509 | - |
dc.identifier.volume | 57 | - |
dc.identifier.issue | 2 | - |
dc.identifier.spage | 665 | - |
dc.identifier.epage | 690 | - |
dc.identifier.isi | WOS:000375076600013 | - |
dc.publisher.place | United States | - |
dc.identifier.issnl | 0020-6598 | - |