Chapter 9 - Implementing Generalized Panel Data Stochastic Frontier Estimators

Abstract

The use of panel data in models examining efficiency and productivity are ubiquitous. The prevalence of panel data appears at both the academic and professional levels. This is no coincidence. The academic interest in stochastic frontier analysis with panel data stems from the ability to decompose various forms of heterogeneity into noise and inefficiency and to examine the behavior of technology over time. For policymakers and regulators, how firms respond to regulatory oversight and benchmarking warrants use of panel data almost by definition, and the increase in observations provided by panel data has the potential to improve estimation efficiency and add power to any inference that is conducted. Thus, panel data stochastic frontier models are legion and of broad appeal.