Preliminary testing of the Cobb–Douglas production function and related inferential issues

In this article, we consider the multiple regression model in the presence of multicollinearity and study the performance of the preliminary test estimator (PTE) both analytically and computationally, when it is a priori suspected that some constraints may hold on the vector parameter space. The performance of the PTE is further analyzed by comparing the risk of some well-known estimators of the ridge parameter through an extensive Monte Carlo simulation study under some bounded and or asymmetric loss functions. An application of the Cobb–Douglas production function is included and from these results as well as the simulation studies, it is clear that the bounded linear exponential loss function outperforms the other loss functions across all the proposed ridge parameters by comparing the risk values.This work is based on the research supported in part by the National Research Foundation of South Africa for the grant TTK1206151317.http://www.tandfonline.com/loi/lssp202018-01-31hb2016Statistic

Technical Efficiency And Its Determinants: An Empirical Study Of Surgical Instruments Cluster Of Pakistan

The empirical study was conducted to examine the technical efficiency of SMEs in the export-oriented surgical instruments cluster of Sialkot, Pakistan. Data was collected through survey questionnaire from 70 SMEs, listed at Census of Manufacturing Industries and Federal Bureau of Statistics. For data analysis, Cobb-Douglas production function and an inefficiency model based on stochastic frontier approach, estimated through OLS method, were employed. The study draws on its inferences from both the qualitative and quantitative data. There was widespread prevalence of technical inefficiencies and provision of indirect inputs, labor, material and energy found to be significant determinants of technical efficiency. Moreover, this export-oriented industrial cluster is shown to experience constant returns to scale.  Provision of proximate specialized surgical instruments and raw-material market is recommended. We also put forward cluster-specific suggestion of pursuing of 'triple-helix+1' model, whereby local community is integrated with the traditional triple helix forces. It was further advocated that by reducing the prevailing technical inefficiency in this urbanization economy, productivity can be enhanced by as much as 5.6%. Implications for cluster-based industries are drawn from our findings to provide pragmatic recommendations to both policymakers and prospective entrepreneurs

DOES CONSISTENT AGGREGATION REALLY MATTER?

Consistent aggregation assures that behavioral properties, which apply to disaggregate relationships also, apply to aggregate relationships. The agricultural economics literature is reviewed which has tested for consistent aggregation or measured statistical bias and/or inferential errors due to aggregation. Tests for aggregation bias and errors of inference are conducted using indices previously tested for consistent aggregation. Failure to reject consistent aggregation in a partition did not entirely mitigate erroneous inference due to aggregation. However, inferential errors due to aggregation were small relative to errors due to incorrect functional form or failure to account for time series properties of data.Research Methods/ Statistical Methods,

Does consistent aggregation really matter?

Consistent aggregation ensures that behavioural properties which apply to disaggregate relationships apply also to aggregate relationships. The agricultural economics literature which has tested for consistent aggregation or measured statistical bias and/or inferential errors due to aggregation is reviewed. Tests for aggregation bias and errors of inference are conducted using indices previously tested for consistent aggregation. Failure to reject consistent aggregation in a partition did not entirely mitigate erroneous inference due to aggregation. However, inferential errors due to aggregation were small relative to errors due to incorrect functional form or failure to account for time series properties of data.Research Methods/ Statistical Methods,

Socio Economic Drivers Influencincing Smallholder Maize Production in Tobacco Growing Zones of Migori County, Kenya

Known by its scientific name Zea Mays, maize is the staple food for most households in Kenya. It is mostly produced by small scale farmers. Maize is also an important livestock feed both as silage and as crop residue, grain and is also used industrially for starch and oil extraction. It is an important source of carbohydrate, protein, iron, vitamin B, and minerals. Kenyans consume maize in a wide variety of ways (ugali, porridges and beer). Green maize, fresh on the cob, is eaten roasted or boiled separately or mixed with legumes. Every part of the maize plant has economic value: the grain, leaves, stalk, tassel, and cob can all be used to produce a large variety of food and non-food products. The general objective of this study was to investigate the socio economic constraints to smallholder maize production in Tobacco growing regions of Migori County, Kenya. However, it was guided by the following specific objectives; to determine the effect of tobacco farming on maize production and to assess the impact of socio-economic factors on smallholder maize production. This study used time series techniques to investigate the relationship between tobacco farming and smallholder maize production in Migori County, during the period 1967 to 2010.The data was collected from Kenya National Bureau of Statistics. The data that was parametrically analyzed using E-views to giving descriptive statistics and inferential statistics. Descriptive statistics involved comparison of means, cross tabulation, use of tables, pie charts and bar graph. A fitted Cobb-Douglas production model was adopted in this study and using the framework of error correction mechanism, it was found that the lagged capital input, fertilizers, labor, research and extension services significantly propagate maize production. Unit root and Granger-causality tests were carried out to make adequate allowance for the dynamic relationship, on stationary and spurious regression problems. However, in the structural macroeconomic model, the individual lagged variables, the aggregated co-regressed variables resulted into a positive R squared at 0.01 significant levels.  Surprisingly, the coefficient of the lagged maize production was found to be negative (- 0.4747) and insignificant only at the 10% level. Keywords: Smallholder Maize Production, Error Correction Model and Food Securit

Assessment of the factors influencing competitiveness fostering the country’s sustainability

Competitiveness is a complex economic category that is closely related to the country’s sustainability. Sustainability can be achieved through the creation of added value, the fostering of quality management and the applying principles of social responsibility, and each area of the activity trying to be competitive at the same time. It follows that both competitiveness and sustainability are dependent on a number of factors at both micro and macro levels. The objective of the article is to assess the impact of factors on competitiveness and consequently on the sustainability of the country. In addition, the following tasks have been implemented: to analyze the theoretical aspects of competitiveness and sustainability; to reveal the main factors, that have an influence on the competitiveness; to assess the influence of factors on competitiveness fostering the sustainability. In this article, the following methods of analysis are used: an analysis and summary of the scientific literature, analysis of the statistical data, Granger causality test, correlation and regression analysis

Empirical models, rules, and optimization

This paper considers supply decisions by firms in a dynamic setting with adjustment costs and compares the behavior of an optimal control model to that of a rule-based system which relaxes the assumption that agents are explicit optimizers. In our approach, the economic agent uses believably simple rules in coping with complex situations. We estimate rules using an artificially generated sample obtained by running repeated simulations of a dynamic optimal control model of a firm's hiring/firing decisions. We show that (i) agents using heuristics can behave as if they were seeking rationally to maximize their dynamic returns; (ii) the approach requires fewer behavioral assumptions relative to dynamic optimization and the assumptions made are based on economically intuitive theoretical results linking rule adoption to uncertainty; (iii) the approach delineates the domain of applicability of maximization hypotheses and describes the behavior of agents in situations of economic disequilibrium. The approach adopted uses concepts from fuzzy control theory. An agent, instead of optimizing, follows Fuzzy Associative Memory (FAM) rules which, given input and output data, can be estimated and used to approximate any non-linear dynamic process. Empirical results indicate that the fuzzy rule-based system performs extremely well in approximating optimal dynamic behavior in situations with limited noise.Decision-making. ,econometric models ,TMD ,

On the Struggle To Attain Universal Competence in a Complex Skill: The Case of a Senior Capstone Experience

Seventeen years ago, a blue-ribbon committee of economists asserted that the “ideal” program for an economics major should include “a capstone experience, whereby students apply their knowledge and skills in creative and systematic ways through research and writing.” (Seigfried, Bartlett, Hansen, Kelley, McCloskey, and Tietenberg (1991)) Yet we are not aware of a data-driven assessment of an implemented senior capstone experience in the economics education literature. We have been experimenting with a senior capstone experience – based on research and writing – for more than a decade. In this paper we describe the history of our senior capstone experience, and provide a data-driven assessment of student performance in this experience. Our primary objective for this senior capstone has been to create a system that will result in all of our majors writing a competent senior thesis. In other words, we want to attain universal competence in a complex skill. This simple objective has, however, been very difficult to achieve. We will argue that undesired variation in student motivation has been our primary obstacle in attaining universal competence.

Modelling animal health as a production factor in dairy production

Farm animal diseases affect livestock production in several different ways. From an economic perspective, diseases are an undesirable contribution to the production process. Diseases thereby lower the producer's profit margins by reducing animal health and causing unnecessary suffering to the animals. For dairy production, mastitis is the most severe disease and causes both reduced animal health, increased costs, and reduced milk yield. Subclinical mastitis can be recognized by an increase in the somatic cell count (SCC), which is, therefore, often used as an indicator of udder health and milk quality. The purpose of this study was to investigate how animal health affects the production by presenting a general model that can be used to estimate the effect of animal health on production. Modelling animal health as a production factor has not been done in previous studies, which makes the analysis in this thesis unique. A quantitative methodology with a deductive theory approach was applied, and microeconomic theories regarding production and animal health economics formed the theoretical framework. A broad literature review was performed regarding reduced animal health in different livestock production systems, in order to be able to develop generalized knowledge regarding how animal health affects production. The study is based on secondary data from Växa Sverige and consisted of both biological- and economic outcomes from 99 dairy farms. Data were analyzed in SPSS and STATA by multiple regression analysis where both a Cobb-Douglas production function and a translog production function were used. On the basis of the results of this study, it can be concluded that animal health has a statistically significant effect on production. Through the results, Swedish dairy producers can estimate whether investments in improved animal health are worth the cost that is added. The developed model can also be generalized and used for other livestock production systems to investigate how animal health affects productionSjukdomar hos lantbruksdjur drabbar animalieproduktionen på flertalet olika sätt. Från ett ekonomiskt perspektiv utgör sjukdomar ett oönskat bidrag i produktionsprocessen genom att minska producentens vinstmarginaler och orsaka onödigt lidande för djuren. För mjölkproduktionen är mastit den allvarligaste sjukdomen och orsakar både reducerad djurhälsa, ökade kostnader och minskad mjölkavkastning. Subklinisk mastit visar sig genom ökning av det somatiska celltalet (SCC) som av den anledningen används som indikator för juverhälsa och mjölkkvalitet. Syftet med det här examensarbetet var att undersöka hur djurhälsa påverkar produktionen genom att utveckla en allmän modell som kan användas för att uppskatta effekterna av djurhälsa på produktionen. Att modellera djurhälsa som en produktionsfaktor har inte gjorts i tidigare studier vilket gör analysen i detta examensarbete unik. En kvantitativ forskningsmetod med en deduktiv ansats har använts där mikroekonomiska teorier har används som referensram för att testa hur djurhälsa påverkar produktionen. Vidare genomfördes en bred litteraturgenomgång gällande reducerad djurhälsa hos andra typer av produktionsinriktningar. Detta för att kunna ta fram generaliserad kunskap om hur djurhälsa påverkar produktionen i allmänhet. Studien baseras på sekundärdata från Växa Sverige och bestod av både biologiska fakta samt ekonomiskt utfall från 99 mjölkgårdar. Data analyserades i SPSS och STATA genom multipel regressionsanalys där både en Cobb-Douglas produktionsfunktion samt translog produktionsfunktion användes för att estimera effekten av djurhälsa. Resultaten visade att djurhälsa har en statistiskt signifikant effekt på produktionsfunktionen. Genom resultaten kan svenska mjölkproducenter estimera om investeringar i förbättrad djurhälsa är värt kostnaden som tillkommer. Modellen som utvecklades kan även generaliseras och användas till andra produktionsinriktningar för att undersöka hur djurhälsa påverkar produktionen för dessa djurslag, genom att anpassa variabeln för djurhälsa till sjukdomar som förekommer för de djurslagen

Testing the Stability of Tourism-Led Growth Hypothesis for Ethiopia

Tourism-Led Growth (TLG) hypothesis demonstrates the profound contribution of tourism industry to the growth of real income. This study examines the long-term impact of international tourism on economic growth in Ethiopia, using a series of annual data spanning from 1995 to 2018. We contribute to the existing empirical literature on Tourism-Led Growth hypothesis, by adopting the conventional least squares framework and the Engle-Granger cointegration test between tourism receipts, trade openness, expenditures on physical capital, expenditures on tertiary education and economic growth in Ethiopia. The Engle-Granger (1987) tested stable long-term relation between the variables considered. This partly guarantees the TLG hypothesis. However, contrary to the predictions of TLG, we have estimated insignificant impact of tourism receipts on the long-run growth of Ethiopian economy, while challenging trustworthiness of the hypothesis in the context of Ethiopia. Our results revealed that the theory itself is incomplete. Besides, the foreign direct investment and domestic investments in physical capital were found significant contributor of long-run real income growth in Ethiopia. It is recommended that the government of Ethiopia should encourage private sector participation to develop the necessary infrastructures in order to achieve higher room tenancy