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Fitting spatial stochastic frontier models in Stata

Author

Listed:
  • Kerui Du

    (Xiamen University)

  • Luis Orea

    (University of Oviedo)

  • Inmaculada C. Álvarez

    (Universidad Autónoma de Madrid)

Abstract

In this article, we introduce a new command, xtsfsp, for fitting spatial stochastic frontier models in Stata. Over the last decades, stochastic frontier models have seen important theoretical progress via the incorporation of various types of spatial components. Models that can account for spatial dependence and spillovers have been developed for efficiency and productivity analysis, drawing extensive attention from industry and academia. Because of the unavailability of the statistical packages, the empirical applications of the new stochastic frontier models appear to be lagging. The xtsfsp command provides a procedure for fitting spatial stochastic frontier models in the style of Orea and Álvarez (2019, Journal of Econometrics 213: 556–577) and Galli (2023, Spatial Economic Analysis 18: 239–258), enabling users to handle different sources of spatial dependence. In this article, we introduce spatial stochastic frontier models, describing the syntax and options of the new command and providing several examples to illustrate its usage.

Suggested Citation

  • Kerui Du & Luis Orea & Inmaculada C. Álvarez, 2024. "Fitting spatial stochastic frontier models in Stata," Stata Journal, StataCorp LP, vol. 24(3), pages 402-426, September.
    • Handle: RePEc:tsj:stataj:v:24:y:2024:i:3:p:402-426
    DOI: 10.1177/1536867X241276109
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    References listed on IDEAS

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    1. Orea, Luis & Álvarez, Inmaculada C., 2019. "A new stochastic frontier model with cross-sectional effects in both noise and inefficiency terms," Journal of Econometrics, Elsevier, vol. 213(2), pages 556-577.
    2. Alberto Gude & Inmaculada Álvarez & Luis Orea, 2018. "Heterogeneous spillovers among Spanish provinces: a generalized spatial stochastic frontier model," Journal of Productivity Analysis, Springer, vol. 50(3), pages 155-173, December.
    3. Belotti, Federico & Ilardi, Giuseppe, 2018. "Consistent inference in fixed-effects stochastic frontier models," Journal of Econometrics, Elsevier, vol. 202(2), pages 161-177.
    4. Chen, Yi-Yi & Schmidt, Peter & Wang, Hung-Jen, 2014. "Consistent estimation of the fixed effects stochastic frontier model," Journal of Econometrics, Elsevier, vol. 181(2), pages 65-76.
    5. Kumbhakar,Subal C. & Wang,Hung-Jen & Horncastle,Alan P., 2015. "A Practitioner's Guide to Stochastic Frontier Analysis Using Stata," Cambridge Books, Cambridge University Press, number 9781107609464, January.
    6. Luis Orea, Inmaculada C. Álvarez, and Tooraj Jamasb, 2018. "A Spatial Stochastic Frontier Model with Omitted Variables: Electricity Distribution in Norway," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    7. Willam Greene, 2005. "Fixed and Random Effects in Stochastic Frontier Models," Journal of Productivity Analysis, Springer, vol. 23(1), pages 7-32, January.
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    12. Glass, Anthony J. & Kenjegalieva, Karligash & Sickles, Robin C., 2016. "A spatial autoregressive stochastic frontier model for panel data with asymmetric efficiency spillovers," Journal of Econometrics, Elsevier, vol. 190(2), pages 289-300.
    13. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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