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Increasing Returns to Scale in U.S. manufacturing industries: evidence from direct and reverse regression

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  • Xi Chen

Abstract

In this paper, I compare the OLS and IV estimators for the direct and reverse regression models in the context of estimating returns to scale and technical progress. It shows that the direct and reverse OLS estimators are inconsistent, that the direct OLS is always more precise than the reverse OLS under the normality assumption, and that the direct IV estimator and its reverse counterpart are consistent and asymptotically equivalent. Working with data from U.S. manufacturing industries over the last half-century, the estimation results show that in most industries increasing returns to scale are important and technical progress is small when it comes to explaining productivity growth.

Suggested Citation

  • Xi Chen, 2011. "Increasing Returns to Scale in U.S. manufacturing industries: evidence from direct and reverse regression," Working Papers of BETA 2011-11, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    • Handle: RePEc:ulp:sbbeta:2011-11
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    Cited by:

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    3. Meixing Dai, 2011. "Motivations and strategies for a real revaluation of the Yuan," Working Papers of BETA 2011-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    4. Houda Ghaya, 2011. "Board of Directors’ Involvement in Strategic Decision Making Process: Definition and Literature Review," Working Papers of BETA 2011-22, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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    More about this item

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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