Title: Statistical inference in a spatial-temporal stochastic frontier model
Authors: John Eustaquio - University of the Philippines (Philippines) [presenting]
Erniel Barrios - University of the Philippines (Philippines)
Rouselle Lavado - Asian Development Bank (Philippines)
Abstract: The stochastic frontier model with heterogeneous technical efficiency explained by exogenous variables is augmented with a spatial-temporal component, a generalization relaxing the panel independence assumption in a panel data. The estimation procedure takes advantage of additivity in the model, computational advantages over simultaneous maximum likelihood estimation of parameters is exhibited. Estimates of technical efficiency estimates are comparable to existing models estimated with maximum likelihood methods. The spatial-temporal component can improve estimates of technical efficiency in a production frontier that is usually biased downwards. We present a test to verify model assumptions that facilitates estimation of parameters.