Forum: help

Translog cost function / SFA / individual efficiencies [ Reply ]
By: Maximo Sangiacomo on 2017-06-05 19:24

Dear all,

I´m trying to find out how to estimate a translog cost function with the SFA function inside Benchmarking R package to retrieve individual efficiencies.
Below I copy two different routines.
With the Benchmarking package I obtain the same coefficients (than with the micEcon) but all standard errors are equal to one and, regarding efficiencies, all firms are fully efficient.
Please, can anybody explain me how to use the translog specification?
Thanks in advance

Best regards,
Maximo

################################################
#TRANSLOG COST -> micEcon
library(micEcon)
library(Benchmarking)
data( germanFarms )
# output quantity:
germanFarms$qOutput <- germanFarms$vOutput / germanFarms$pOutput
# value of labor input
germanFarms$vLabor <- germanFarms$pLabor + germanFarms$qLabor
# total variable cost
germanFarms$cost <- germanFarms$vLabor + germanFarms$vVarInput
# a time trend to account for technical progress:
germanFarms$time <- c(1:20)
# estimate a translog cost function
estResult <- translogCostEst( cName = "cost", yName = "qOutput",
pNames = c( "pLabor", "pVarInput" ), fNames = "land",
shifterNames = "time", data = germanFarms, homPrice = FALSE )
summary( estResult$est )
################################################
# TRANSLOG COST -> Benchmarking
lcost <- log(germanFarms$cost)
a1 <- log(germanFarms$qOutput)
a2 <- log(germanFarms$pLabor)
a3 <- log(germanFarms$pVarInput)
a4 <- log(germanFarms$land)
b1_1 <- 0.5 * log(germanFarms$qOutput)^2
b1_2 <- log(germanFarms$qOutput) * log(germanFarms$pLabor)
b1_3 <- log(germanFarms$qOutput) * log(germanFarms$pVarInput)
b1_4 <- log(germanFarms$qOutput) * log(germanFarms$land)
b2_2 <- 0.5 * log(germanFarms$pLabor)^2
b2_3 <- log(germanFarms$pLabor) * log(germanFarms$pVarInput)
b2_4 <- log(germanFarms$pLabor) * log(germanFarms$land)
b3_3 <- 0.5 * log(germanFarms$pVarInput)^2
b3_4 <- log(germanFarms$pVarInput) * log(germanFarms$land)
b4_4 <- 0.5 * log(germanFarms$land)^2
d1 <- log(germanFarms$time)
x <- cbind(a1, a2, a3, a4, b1_1, b1_2, b1_3, b1_4, b2_2, b2_3, b2_4, b3_3, b3_4, b4_4, d1)
costSfaTL <- sfa(x, lcost)
summary(costSfaTL)
teCostTL <- teBC.sfa(costSfaTL)
teCostTL