Nonparametric Efficiency Estimation in Stochastic Environments (II)

We consider the issues of noise-to-signal estimation, finite sample performance andhypothesis testing for the nonparametric efficiency estimation technique proposed inCherchye, L., T. Kuosmanen and G. T. Post (2001) 'Nonparametric efficiencyestimation in stochastic environments', forthcoming in Operations Research. Inaddition, we apply the technique for analyzing European banks.hypothesis testing;European banks;noise-to-signal estimation;nonparametric efficiency estimation;finite sample performance

Attacking Poverty: Is It Globalisation?… Or Is It the Institutions?

We empirically analyze the relationship between globalisation and poverty. Deviating from the mainstream literature, we use ‘synthetic’ globalisation and poverty indicators, which combine multiple single indicators into single-valued statistics. Further, we study a sample that includes OECD countries as well as non-OECD countries, which allows us to examine the effect of structural differences between countries (summarized in a OECD dummy). Our results reveal no significant effect of globalisation on poverty when correcting for the OECD effect. We argue that this suggests institutional quality as a more fundamental determinant of a country’s poverty performance than the degree of integration with the global economy. On the methodological level, our use of synthetic indicators entails a parsimonious specification of the globalisation-poverty relationship, which increases its transparency.

Nonparametric Efficiency Estimation in Stochastic Environments (II)

We consider the issues of noise-to-signal estimation, finite sample performance and hypothesis testing for the nonparametric efficiency estimation technique proposed in Cherchye, L., T. Kuosmanen and G. T. Post (2001) 'Nonparametric efficiency estimation in stochastic environments', forthcoming in Operations Research. In addition, we apply the technique for analyzing European banks

Methodological Advances in Dea

We survey the methodological advances in DEA over the last 25 years and discuss the necessary conditions for a sound empirical application. We hope this survey will contribute to the further dissemination of DEA, the knowledge of its relative strengths and weaknesses, and the tools currently available for exploiting its full potential. Our main points are illustrated by the case of the DEA study used by the regulatory office of the Dutch electricity sector (Dienst Toezicht Elektriciteitswet; Dte) for setting price caps

Revealed cardinal preference

I prove that as long as we allow the marginal utility for money (lambda) to vary between purchases (similarly to the budget) then the quasi-linear and the ordinal budget-constrained models rationalize the same data. However, we know that lambda is approximately constant. I provide a simple constructive proof for the necessary and sufficient condition for the constant lambda rationalization, which I argue should replace the Generalized Axiom of Revealed Preference in empirical studies of consumer behavior. 'Go Cardinals!' It is the minimal requirement of any scientifi c theory that it is consistent with the data it is trying to explain. In the case of (Hicksian) consumer theory it was revealed preference -introduced by Samuelson (1938,1948) - that provided an empirical test to satisfy this need. At that time most of economic reasoning was done in terms of a competitive general equilibrium, a concept abstract enough so that it can be built on the ordinal preferences over baskets of goods - even if the extremely specialized ones of Arrow and Debreu. However, starting in the sixties, economics has moved beyond the 'invisible hand' explanation of how -even competitive- markets operate. A seemingly unavoidable step of this 'revolution' was that ever since, most economic research has been carried out in a partial equilibrium context. Now, the partial equilibrium approach does not mean that the rest of the markets are ignored, rather that they are held constant. In other words, there is a special commodity -call it money - that reflects the trade-offs of moving purchasing power across markets. As a result, the basic building block of consumer behavior in partial equilibrium is no longer the consumer's preferences over goods, rather her valuation of them, in terms of money. This new paradigm necessitates a new theory of revealed preference