A reduced-form model for dynamic efficiency measurement: Application to dairy farms in Germany and the Netherlands

Grigorios Emvalomatis, Spiro E. Stefanou, Alfons Oude Lansink

    Research output: Contribution to journalArticlepeer-review

    37 Citations (Scopus)

    Abstract

    The stochastic distance function model is extended to allow for the inefficiency component of the error term to be autocorrelated, as implied by a dynamic model of firm behavior. The autocorrelation parameter can then be interpreted as a measure of the persistence of inefficiency. The model is viewed from a state-space perspective, and Kalman filtering techniques are proposed for estimation. The model is applied to two panels of dairy farms from Germany and the Netherlands. The results suggest a very high degree of persistence of inefficiency through time.
    Original languageEnglish
    Pages (from-to)161-174
    Number of pages14
    JournalAmerican Journal of Agricultural Economics
    Volume93
    Issue number1
    DOIs
    Publication statusPublished - 1 Jan 2011

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