The University of Southampton
University of Southampton Institutional Repository

Assessing the effects of measurement errors on the estimation of production functions

Assessing the effects of measurement errors on the estimation of production functions
Assessing the effects of measurement errors on the estimation of production functions
This article explores to what extent the poor results that are often found when estimating parameters of production functions can be attributed to measurement errors, due to the use of common price deflators across firms. Because of the lack of detailed micro-economic data, econometricians have to rely on industry-wide deflators when computing outputs and intermediate inputs. A unique feature of the longitudinal data used in this paper is that it reports firm-level prices. This allows for a comparative assessment of production function parameters where the outputs and intermediate inputs are computed using both firm-specific prices and industry-wide deflators. The empirical results presented in this paper show that the use of common deflators across firms leads to lower scale estimates, mainly because of a large downward bias in the estimated coefficients for labour
0883-7252
879-891
Ornaghi, Carmine
33275e47-4642-4023-a195-39c91d0146b0
Ornaghi, Carmine
33275e47-4642-4023-a195-39c91d0146b0

Ornaghi, Carmine (2006) Assessing the effects of measurement errors on the estimation of production functions. Journal of Applied Econometrics, 21 (6), 879-891. (doi:10.1002/jae.887).

Record type: Article

Abstract

This article explores to what extent the poor results that are often found when estimating parameters of production functions can be attributed to measurement errors, due to the use of common price deflators across firms. Because of the lack of detailed micro-economic data, econometricians have to rely on industry-wide deflators when computing outputs and intermediate inputs. A unique feature of the longitudinal data used in this paper is that it reports firm-level prices. This allows for a comparative assessment of production function parameters where the outputs and intermediate inputs are computed using both firm-specific prices and industry-wide deflators. The empirical results presented in this paper show that the use of common deflators across firms leads to lower scale estimates, mainly because of a large downward bias in the estimated coefficients for labour

This record has no associated files available for download.

More information

Published date: September 2006

Identifiers

Local EPrints ID: 47651
URI: http://eprints.soton.ac.uk/id/eprint/47651
ISSN: 0883-7252
PURE UUID: 2a7ef4cd-c69f-4c5f-89fd-c8157114637b
ORCID for Carmine Ornaghi: ORCID iD orcid.org/0000-0003-2704-2537

Catalogue record

Date deposited: 07 Aug 2007
Last modified: 16 Mar 2024 03:42

Export record

Altmetrics

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×