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Technology Modeling: Curvature is not Sufficient for Regularity

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Author Info
William A. Barnett (Washington University in St. Louis)
Milka Kirova (Washington University in St. Louis)
Meenakshi Pasupathy (Washington University in St. Louis)

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Abstract

We estimate the generalized McFadden (generalized quadratic) production function by GMM for a manufacturing firm that uses risky monetary assets among its inputs and for a bank that produces risky monetary assets as outputs. We impose curvature globally and monotonicity at a point, as is the capability of the model. We find that monotonicity is violated at many data points away from the one point at which it is imposed. We conclude that the model's inability to impose monotonicity globally is a serious limitation, despite the ability to impose curvature globally.

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Paper provided by EconWPA in its series Econometrics with number 9602002.

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Length: 48 pages
Date of creation: 12 Feb 1996
Date of revision: 24 Jun 1999
Handle: RePEc:wpa:wuwpem:9602002

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Related research
Keywords: regularity quadratic technology curvature monotonicity;

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Find related papers by JEL classification:
C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. David L. Ryan & Terence J. Wales, . "A Simple Method For Imposing Local Curvature In Some Flexible Consumer Demand Systems," Old UBC Departmental Papers 9625, UBC Department of Economics. [Downloadable!]
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