MORE@DIAG Seminar Nonparametric Estimation of Efficiency in the Presence of Environmental Variables
** Il seminario è stato annullato a causa dei recenti sviluppi dell'epidemia di coronavirus in Italia **
In this seminar, we will present the Web of Science Highly Cited Paper Daraio, C., Simar, L., & Wilson, P. W. (2018). Central limit theorems for conditional efficiency measures and tests of the ‘separability’ condition in non‐parametric, two‐stage models of production. The Econometrics Journal, 21(2), 170-191.
Abstract
In this paper, we demonstrate that standard central limit theorem (CLT) results do not hold for means of nonparametric, conditional efficiency estimators, and we provide new CLTs that permit applied researchers to make valid inference about mean conditional efficiency or to compare mean efficiency across groups of producers. The new CLTs are used to develop a test of the restrictive ‘separability' condition that is necessary for second-stage regressions of efficiency estimates on environmental variables. We show that if this condition is violated, not only are second-stage regressions difficult to interpret and perhaps meaningless, but also first-stage, unconditional efficiency estimates are misleading. As such, the test developed here is of fundamental importance to applied researchers using nonparametric methods for efficiency estimation. The test is shown to be consistent and its local power is examined. Our simulation results indicate that our tests perform well both in terms of size and power. We provide a real-world empirical example by reexamining the paper by Aly et al. (1990, Review of Economics and Statistics 72, 211-18) and rejecting the separability assumption implicitly assumed by Aly et al., calling into question results that appear in hundreds of papers that have been published in recent years.
After that, we will introduce recent challenges and work in progress.
Joint work with Cinzia Daraio and Paul W. Wilson.
Short bio
Léopold Simar is Emeritus Professor of Statistics at the ISBA Institute, Catholic University of Louvain, Louvain-la-Neuve, Belgium.
He is regularly visiting professor at DIAG since 2012. He received various Awards including the following: i) “Professore di Chiara Fama” (2006 and 2007), Italian Ministry of Research: Scuola Superiore Sant’Anna, Pisa & University of Pisa; ii) “Chaire d’Excellence Pierre de Fermat” (2008 and 2009), Région Midi-Pyrénées, Toulouse School of Economics, Toulouse; iii) Fellow of the Journal of Econometrics, 2015, for <<Extraordinary Publishing Contributions to Econometrics>> and iv) Econometric Theory Award (2016) in <<Recognition of Research Contributions, multa scripsit, to the Science of Econometrics>>.
