A stochastic frontier analysis approach for estimating energy demand and efficiency in the transport sector of Latin America and the Caribbean

In this paper, a stochastic frontier analysis approach is applied to estimate energy demand functions in the transport sector. This approach allows us to obtain energy efficiency measures at country level that are a robust alternative to the energy intensity indicators commonly used for international comparisons. A transitive multilateral price index is constructed for aggregating the diverse energy components employed in the sector. Due to the likely unobserved heterogeneity among countries, the use of a random parameters model is proposed to accommodate these differences and to obtain different income and price elasticities per country. The estimated model is compared with alternative approaches of addressing this issue such as latent class, true fixed effects or true random effects models. This study is the first to use a random parameters stochastic frontier approach in the estimation of energy demand functions. The proposed procedure is applied to Latin America and the Caribbean, where the transport sector represents a large share of total energy consumption

Estimation of semiparametric stochastic frontiers under shape constraints with application to pollution generating technologies

A number of studies have explored the semi- and nonparametric estimation of stochastic frontier models by using kernel regression or other nonparametric smoothing techniques. In contrast to popular deterministic nonparametric estimators, these approaches do not allow one to impose any shape constraints (or regularity conditions) on the frontier function. On the other hand, as many of the previous techniques are based on the nonparametric estimation of the frontier function, the convergence rate of frontier estimators can be sensitive to the number of inputs, which is generally known as “the curse of dimensionality” problem. This paper proposes a new semiparametric approach for stochastic frontier estimation that avoids the curse of dimensionality and allows one to impose shape constraints on the frontier function. Our approach is based on the singleindex model and applies both single-index estimation techniques and shape-constrained nonparametric least squares. In addition to production frontier and technical efficiency estimation, we show how the technique can be used to estimate pollution generating technologies. The new approach is illustrated by an empirical application to the environmental adjusted performance evaluation of U.S. coal-fired electric power plants.stochastic frontier analysis (SFA), nonparametric least squares, single-index model, sliced inverse regression, monotone rank correlation estimator, environmental efficiency

Comparing efficiency of health systems across industrialized countries: a panel analysis.

BackgroundRankings from the World Health Organization (WHO) place the US health care system as one of the least efficient among Organization for Economic Cooperation and Development (OECD) countries. Researchers have questioned this, noting simplistic or inappropriate methodologies, poor measurement choice, and poor control variables. Our objective is to re-visit this question by using newer modeling techniques and a large panel of OECD data.MethodsWe primarily use the OECD Health Data for 25 OECD countries. We compare results from stochastic frontier analysis (SFA) and fixed effects models. We estimate total life expectancy as well as life expectancy at age 60. We explore a combination of control variables reflecting health care resources, health behaviors, and economic and environmental factors.ResultsThe US never ranks higher than fifth out of all 36 models, but is also never the very last ranked country though it was close in several models. The SFA estimation approach produces the most consistent lead country, but the remaining countries did not maintain a steady rank.DiscussionOur study sheds light on the fragility of health system rankings by using a large panel and applying the latest efficiency modeling techniques. The rankings are not robust to different statistical approaches, nor to variable inclusion decisions.ConclusionsFuture international comparisons should employ a range of methodologies to generate a more nuanced portrait of health care system efficiency

Analysis of the BRIC Countries Technical Efficiency Patterns Using Stochastic Frontier Approach

This study investigates the technical efficiency of BRIC-countries (Brazil, Russia, India, China) at the disaggregated level of six economic activities using stochastic frontier approach. Technical efficiency scores and efficiency externalities effects of international trade and foreign direct investment inflows are estimated based on the panel of sixteen countries - G20 members - over the period from 1995 to 2009. The results suggest that foreign direct investment is a conduit of the positive technological spillovers in all sectors under analysis. Once controlling for the domestic level of the human capital that captures technology absorptive capacity, the positive effect of the international trade is observed in the industrial sector in general and manufacturing in particular, as well as in trade, hotels and restaurants. The positive impact of the human capital on the level of technical efficiency is significant for all sectors, except for the agriculture, and robust for two different measures of human capital

Structured parameter estimation for LFG-DOP using Backoff

Despite its state-of-the-art performance, the Data Oriented Parsing (DOP) model has been shown to suffer from biased parameter estimation, and the good performance seems more the result of ad hoc adjustments than correct probabilistic generalization over the data. In recent work, we developed a new estimation procedure, called Backoff Estimation, for DOP models that are based on Phrase-Structure annotations (so called Tree-DOP models). Backoff Estimation deviates from earlier methods in that it treats the model parameters as a highly structured space of correlated events (backoffs), rather than a set of disjoint events. In this paper we show that the problem of biased estimates also holds for DOP models that are based on Lexical-Functional Grammar annotations (i.e. LFG-DOP), and that the LFG-DOP parameters also constitute a hierarchically structured space. Subsequently, we adapt the Backoff Estimation algorithm from Tree-DOP to LFG-DOP models. Backoff Estimation turns out to be a natural solution to some of the specific problems of robust parsing under LFGDOP

A Monte Carlo Study of Old and New Frontier Methods for Efficiency Measurement

This study presents the results of an extensive Monte Carlo experiment to compare different methods of efficiency analysis. In addition to traditional parametric-stochastic and nonparametric-deterministic methods recently developed robust nonparametric-stochastic methods are considered. The experimental design comprises a wide variety of situations with different returns-to-scale regimes, substitution elasticities and outlying observations. As the results show, the new robust nonparametric-stochastic methods should not be used without cross-checking by other methods like stochastic frontier analysis or data envelopment analysis. These latter methods appear quite robust in the experiments.Monte Carlo experiment, efficiency measurement, nonparametric stochastic methods