Fitting spatial stochastic frontier models in Stata

Abstract

In this article, we introduce a new command, xtsfsp, for fitting spatial stochastic frontier models in Stata. Over the last decades, stochastic frontier models have seen important theoretical progress via the incorporation of various types of spatial components. Models that can account for spatial dependence and spillovers have been developed for efficiency and productivity analysis, drawing extensive attention from industry and academia. Because of the unavailability of the statistical packages, the empirical applications of the new stochastic frontier models appear to be lagging. The xtsfsp command provides a procedure for fitting spatial stochastic frontier models in the style of Orea and Álvarez (2019, Journal of Econometrics 213: 556-577) and Galli (2023, Spatial Economic Analysis 18: 239-258), enabling users to handle different sources of spatial dependence. In this article, we introduce spatial stochastic frontier models, describing the syntax and options of the new command and providing several examples to illustrate its usage.

Keywords

st0752 xtsfsp stochastic frontier models SFA spatial dependence technical efficiency spillovers

Get full access to this article

View all access options for this article.

References

Aigner

D. J.

Lovell

C. A. K.

Schmidt

. 1977. Formulation and estimation of stochastic frontier production function models. Journal of Econometrics 6: 21–37. https://doi.org/10.1016/0304-4076(77)90052-5.

Ayouba

. 2023. Spatial dependence in production frontier models. Journal of Productivity Analysis 60: 21–36. 10.1007/s11123-023-00670-7.

Battese

G. E.

Coelli

T. J.

. 1995. A model for technical inefficiency effects in a stochastic frontier production function for panel data. Empirical Economics 20: 325–332. 10.1007/BF01205442.

Belotti

Daidone

Ilardi

Atella

. 2013. Stochastic frontier analysis using Stata. Stata Journal 13: 719–758. 10.1177/1536867X1301300404.

Belotti

Ilardi

. 2018. Consistent inference in fixed-effects stochastic frontier models. Journal of Econometrics 202: 161–177. 10.1016/j.jeconom. 2017.09.005.

Chen

Y.-Y.

Schmidt

Wang

H.-J.

. 2014. Consistent estimation of the fixed effects stochastic frontier model. Journal of Econometrics 181: 65–76. https://doi.org/10.1016/j.jeconom.2013.05.009.

Ditzen

Grieser

Zekhnini

. 2023. nwxtregress: Network regressions in Stata. GitHub. https://janditzen.github.io/nwxtregress/ .

Druska

Horrace

W. C.

. 2004. Generalized moments estimation for spatial panel data: Indonesian rice farming. American Journal of Agricultural Economics 86: 185–198.

2017. translog: Stata module to create new variables for a translog function. Statistical Software Components S458318, Department of Economics, Boston College. https://ideas.repec.org/c/boc /bocode/s458318.html.

10.

Fé

Hofler

. 2020. sfcount: Command for count-data stochastic frontiers and underreported and overreported counts. Stata Journal 20: 532–547. 10.1177/1536867X20953566.

11.

Galli

. 2023. A spatial stochastic frontier model including both frontier and error- based spatial cross-sectional dependence. Spatial Economic Analysis 18: 239–258. 10.1080/17421772.2022.2097729.

12.

Glass

A. J.

Kenjegalieva

Sickles

R. C.

. 2016. A spatial autoregressive stochastic frontier model for panel data with asymmetric efficiency spillovers. Journal of Econometrics 190: 289–300. 10.1016/j.jeconom.2015.06.011.

13.

Greene

W. H

. 2005. Fixed and random effects in stochastic frontier models. Journal of Productivity Analysis 23: 7–32. 10.1007/s11123-004-8545-1.

14.

Gude

Álvarez

Orea

. 2018. Heterogeneous spillovers among Spanish provinces: A generalized spatial stochastic frontier model. Journal of Productivity Analysis 50: 155–173. 10.1007/s11123-018-0540-z.

15.

Jann

2005. moremata: Stata module (Mata) to provide various functions. Statistical Software Components S455001, Department of Economics, Boston College. https: //ideas.repec.org/c/boc/bocode/s455001.html.

16.

Jeanty

P. W.

2010. spwmatrix: Stata module to generate, import, and export spatial weights. Statistical Software Components S457111, Department of Economics, Boston College. https://ideas.repec.org/c/boc/bocode/s457111.html .

17.

Kabatek

2022. tictoc: Stata module to provide simplified timer commands. Statistical Software Components S459101, Department of Economics, Boston College. https://ideas.repec.org/c/boc/bocode/s459101.html .

18.

Karakaplan

M. U

. 2017. Fitting endogenous stochastic frontier models in Stata. Stata Journal 17: 39–55. 10.1177/1536867X1701700103.

19.

Karakaplan

M. U.

2018. xtsfkk: Stata module to estimate endogenous panel stochastic frontier models in the style of Karakaplan and Kutlu. Statistical Software Components S458445, Department of Economics, Boston College. https://ideas.repec.org/c/boc/ bocode / s458445.html.

20.

Karakaplan

M. U.

Kutlu

. 2017. Handling endogeneity in stochastic frontier analysis. Economics Bulletin 37: 889–901.

21.

Kumbhakar

S. C.

Wang

H.-J.

Horncastle

A. P.

. 2015. A Practitioner’s Guide to Stochastic Frontier Analysis Using Stata. Cambridge: Cambridge University Press. https://doi.org/10.1017/CBO9781139342070.

22.

Kutlu

Tran

K. C.

Tsionas

M. G.

. 2020. A spatial stochastic frontier model with endogenous frontier and environmental variables. European Journal of Operational Research 286: 389–399. 10.1016/j.ejor.2020.03.020.

23.

Lian

Liu

Parmeter

C. F.

. 2023. Two-tier stochastic frontier analysis using Stata. Stata Journal 23: 197–229. 10.1177/1536867X231162033.

24.

Liu

Sickles

R. C.

. 2024. Industry-specific productivity and spillovers through input-output linkages: Evidence from Asia-Pacific value chain. Review of Income and Wealth 70: 345–369. 10.1111/roiw.12639.

25.

Meeusen

van den Broeck

. 1977. Efficiency estimation from Cobb-Douglas production functions with composed error. International Economic Review 18: 435–444. https://doi.org/10.2307/2525757.

26.

Orea

Álvarez

I. C.

. 2019. A new stochastic frontier model with cross-sectional effects in both noise and inefficiency terms. Journal of Econometrics 213: 556–577. 10.1016/j.jeconom.2019.07.004.

27.

Orea

Álvarez

I. C.

Jamasb

. 2018. A spatial stochastic frontier model with omitted variables: Electricity distribution in Norway. Energy Journal 39: 93–116. https://doi.org/10.5547/01956574.39.3.lore.

28.

Orea

Álvarez-Ayuso

Servén

. 2024. The structural and productivity effects of infrastructure provision in developed and developing countries. In Advances in Econometrics. Vol. 46, Essays in Honor of Subal Kumbhakar, ed. C. F. Parmeter, M. G. Tsionas, and H.-J. Wang, 265-308. Leeds, UK: Emerald. 10.1108/S0731-905320240000046010.

29.

Restuccia

Rogerson

. 2013. Misallocation and productivity. Review of Economic Dynamics 16: 1–10. 10.1016/j.red.2012.11.003.

30.

Statistical Consulting Group. 2017. graph2tex: Convert Stata graph to .eps with LTEX code. UCLA: Statistical Consulting Group. https://stats.oarc.ucla.edu/stata/ado/analysis/graph2tex-hlp-htm/ .

31.

Straub

. 2011. Infrastructure and development: A critical appraisal of the macro-level literature. Journal of Development Studies 47: 683–708. 10.1080/00220388.2010.509785.

32.

Wang

H.-J

. 2003. A stochastic frontier analysis of financing constraints on investment: The case of financial liberalization in Taiwan. Journal of Business and Economic Statistics 21: 406–419. 10.1198/073500103288619016.

33.

Wang

H.-J.

C.-W.

. 2010. Estimating fixed-effect panel stochastic frontier models by model transformation. Journal of Econometrics 157: 286–296. 10.1016/j.jeconom.2009.12.006.

Supplementary Material

Please find the following supplemental material available below.

For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.

For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.

18.74 MB

0.00 MB