G2TT
来源类型Discussion paper
规范类型论文
来源IDDP11399
DP11399 Production Function Estimation with Measurement Error in Inputs
Jan De Loecker; Allan Collard-Wexler
发表日期2016-07-19
出版年2016
语种英语
摘要Production functions are a central component in a variety of economic analyzes. However, these production functions often first need to be estimated us- ing data on individual production units. There is reason to believe that, more than any other input in the production process, there are severe errors in the recording of capital stock. Thus, when estimating production functions, we need to account for the ubiquity of measurement error in capital stock. This paper shows that commonly used estimation techniques in the productivity literature fail in the presence of plausible amounts of measurement error in capital. We propose an estimator that addresses this measurement error, while controlling for unobserved productivity shocks. Our main insight is that investment expenditures are informative about a producer’s capital stock, and we propose a hybrid IV-Control function approach that instruments capital with (lagged) investment, while relying on standard intermediate input de- mand equations to offset the simultaneity bias. We rely on a series of Monte Carlo simulations and find that standard approaches yield downward-biased capital coefficients, while our estimator does not. We apply our estimator to two standard datasets, the census of manufacturing firms in India and Slove- nia, and find capital coefficients that are, on average, twice as large.
主题Industrial Organization ; International Trade and Regional Economics
关键词Production function Measurement error inputs
URLhttps://cepr.org/publications/dp11399
来源智库Centre for Economic Policy Research (United Kingdom)
资源类型智库出版物
条目标识符http://119.78.100.153/handle/2XGU8XDN/540213
推荐引用方式
GB/T 7714
Jan De Loecker,Allan Collard-Wexler. DP11399 Production Function Estimation with Measurement Error in Inputs. 2016.
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