Testing the relationship between competition and efficiency in banking: A panel data analysis

The relationship between competition and efficiency in the banking sectors of five EU countries is investigated using Granger-type causality test estimations. We find positive causation between market power and efficiency, whereas the causality running from efficiency to competition is weak.     

A panel data analysis of the growth effects of remittances

Many development economists believe that remittances by the migrant workers are an important source of funds for long run growth. Therefore, recent studies have investigated the growth effects remittances in the recipient countries but reached different conclusions. This paper analyses the strength of these effects with a common data set with alternative specifications and estimation methods. Our results show that the direct growth effects of remittances are insignificant. However, remittances may have small indirect growth effects.     

Adjustment of inputs and measurement of technical efficiency: A dynamic panel data analysis of the Egyptian manufacturing sectors

The purpose of this article is to construct a dynamic stochastic production frontier incorporating the sluggish adjustment of inputs, to measure the speed of adjustment of output, and to compare the technical efficiency estimates from this dynamic model to those from a static model. By assuming instantaneous adjustment of all inputs, a static model may underestimate technical efficiency of a production unit in the short-run. However, in this article I show that under the assumption of similar adjustment speed for all inputs, a linear partial adjustment scheme for output characterizes the dynamic production frontier. The dynamic frontier with time-invariant technical efficiency is estimated using the system GMM (generalized method of moments) estimator. Applying the model and estimation method on a panel data set spanning 9?years of data on private manufacturing establishments in Egypt, I find that (1) the speed of adjustment of output is significantly lower than unity, (2) the static model underestimates technical efficiency by 4.5 percentage points on average, and (3) the ranking of production units based on their technical efficiency measures changes when the lagged adjustment process of inputs is taken into account.     

Estimating most productive scale size with stochastic data in data envelopment analysis

This article estimates most productive scale size in stochastic data envelopment analysis (DEA). Jahanshahloo and Khodabakhshi [Jahanshahloo, G.R. and Khodabakhshi, M., Using input–output orientation model for determining most productive scale size in DEA. Applied Mathematics and Computation 2003, 146(2–3), 849–855.] studied most productive scale size in classic data envelopment analysis. The classic data envelopment analysis requires that the values for all inputs and outputs be known exactly. However, this assumption may not be true, because data in many real applications cannot be precisely measured. One of the important methods to deal with imprecise data is considering stochastic data in DEA. Therefore, this research studies most productive scale size with considering stochastic data in DEA. To that end, input–output orientation model introduced in Jahanshahloo and Khodabakhshi [Jahanshahloo, G.R. and Khodabakhshi, M., Using input–output orientation model for determining most productive scale size in DEA. Applied Mathematics and Computation 2003, 146(2–3), 849–855.] is extended in stochastic data envelopment analysis. To solve the stochastic model, a deterministic equivalent is obtained. Although the deterministic equivalent is non-linear, it can be converted to a quadratic program. Furthermore, data of software companies is used to apply the proposed approach. Performance of software companies are evaluated based on their scale sizes in classic and stochastic data envelopment analysis.     

Technical efficiency of Spanish manufacturing firms: a panel data approach

This paper estimates the levels of technical efficiency reached by Spanish manufacturing firms, through an econometric estimation of frontier production functions for fifteen sectors of activity, and also, obtains other relevant technological measurements of these productive processes such as the scale and the technical progress parameters. The methodology used is the panel data methods (Schmidt and Sickles, 1984). The statistical source is provided by the Survey on Business Strategies (Encuesta Sobre Estrategias Empresariales), a panel of data covering 855 Spanish manufacturing firms observed over the period 1990-1994. Our econometric results confirm the great heterogeneity in the firms' efficiency, the predominance of constant returns to scale and the great rate of technological progress.     

Using panel data analysis to estimate confidence intervals for the DEA efficiency of individual decision making units

This article demonstrates a methodology using panel data analysis to estimate confidence intervals for the data envelopment analysis efficiency of individual decision making units (DMUs), and the statistical significance of trends in individual DMU efficiency. The procedure accounts for stochastic variations of the inputs and outputs of the target DMU as well as stochastic variations of the inputs and outputs of its efficient benchmark peers. The procedure is demonstrated using 9 years of data from 34 Canadian paratransit agencies.     

Tourism and trade in OECD countries. A dynamic heterogeneous panel data analysis

This article studies the empirical link between international tourism and trade. We apply dynamic heterogeneous panel data techniques to analyse both long and short-run relationship for the case study of OECD countries. This link is studied by estimating the cointegration vector and analysing the short causality between variables. The analysis recognises that inbound tourism can promote international trade and also that international flow of goods requires and may encourage tourist arrivals and departures. The statistical significance of this link supports the presence of business opportunities due to the potential complementary relationship between tourism and trade. The results suggest a short-run nexus between tourism and trade, and that these variables are cointegrated.     

Government accountability and fiscal discipline: A panel analysis using Swiss data

Government accountability through electoral engagement, involvement and participation in the political debate can affect government performance. Using data for the full sample of Swiss cantons over the 1981–2001 period, this paper provides empirical evidence that government accountability is crucial for fiscal discipline. Specifically, in cantons with high levels of government accountability, the level of indebtedness is significantly lower, indicating that accountability supports fiscal discipline. To obtain a useful approximation for government accountability between citizens and their representatives, we use information from direct voter participation in political decisions (initiatives and public referenda) in Swiss state (cantonal) governments. Electoral support of government proposals reveals an important aspect of accountability in a real world setting.     

Impact of Bt cotton on pesticide poisoning in smallholder agriculture: A panel data analysis

While substantial research on the productivity and profit effects of Bt cotton has been carried out recently, the economic evaluation of positive and negative externalities has received much less attention. Here, we focus on farmer health impacts resulting from Bt-related changes in chemical pesticide use. Previous studies have documented that Bt cotton has reduced the problem of pesticide poisoning in developing countries, but they have failed to account for unobserved heterogeneity between technology adopters and non-adopters. We use unique panel survey data from India to estimate unbiased effects and their developments over time. Bt cotton has reduced pesticide applications by 50%, with the largest reductions of 70% occurring in the most toxic types of chemicals. Results of fixed-effects Poisson models confirm that Bt has notably reduced the incidence of acute pesticide poisoning among cotton growers. These effects have become more pronounced with increasing technology adoption rates. Bt cotton now helps to avoid several million cases of pesticide poisoning in India every year, which also entails sizeable health cost savings.     

A generalized panel data switching regression model

This paper considers a generalized panel data model of polychotomous and/or sequential switching which can also accommodate the dependence between unobserved effects and covariates in the model. We showcase our model using an empirical illustration in which we estimate scope economies for the publicly owned electric utilities in the US during the period from 2001 to 2003.     

Determinants of international tourism: a three-dimensional panel data analysis

International tourism is a fast growing industry generating half a trillion dollars in annual revenues and accounting for almost 10%?of total international trade, and almost half of total trade in services. Yet, it has so far failed to receive the attention it deserves from mainstream economics. This paper attempts to provide an initial understanding of the determinants of international tourism. This paper claims that international tourism, as other forms of trade in services, is driven by unique factors of production, and may be better dealt with in a single industry study rather than in a general equilibrium trade model. In order to understand these determinants the world is viewed as a market of differentiated products, and a discrete choice estimation technique is applied to a large three-dimensional data set of tourist flows. It is shown that a relatively simple estimation technique, combined with a rich data set, can deliver reasonable substitution patterns. It is found, among other things, that political risk is very important for tourism, and that exchange rates matter mainly for tourism to developed countries. These have exchange rate elasticity of about one.     

A stochastic frontier model of the productive efficiency of Korean container terminals

A central objective of port privatization and/or deregulation policies is stimulating greater efficiency by engendering a more competitive market and commercial approach to management. Korea provides a prime example of a nation that is implementing such policies. Also, its ports play a pivotal role in world shipping, particularly in the ever-burgeoning container market. The success of these policies in increasing the productive efficiency of Korean container terminals is assessed. The UK container terminal sector provides a useful benchmark for comparison since privatization and deregulation have formed an integral part of UK port reforms for nearly 20 years and the effect on efficiency, having had time to mature, will be much easier to gauge. The stochastic frontier model is justified as the chosen methodology for estimating productive efficiency levels and is applied to cross-sectional data under a variety of distributional assumptions. A panel data model is also estimated. Results are consistent and suggest (1) The degree of private sector involvement in sample container terminals is positively related to productive efficiency and (2) Improved productive efficiency has followed the implementation of privatization and deregulation policies within the Korean sector. Even though not categorical, these conclusions are important because the market for container throughput is internationally competitive and if policies which promote competition between Korean container terminals lead to greater productive efficiency, this will inevitably make the sector as a whole more competitive internationally.     

Fixprice analysis in productive economies

The paper compares the definitions of Fixprice Equilibrium for productive convex economies due to Drèze, Benassy, and Malinvaud-Younès. It turns out that Drèze's (resp., Malinvaud-Younès') notion is the strictest (resp. least strict) one. The three notions are, however, equivalent under smoothness and absence of intermediate goods. They are, in particular, equivalent for the familiar fixprice model with three goods (money, labor, and output) studied among others by Barro-Grossman, Benassy and Malinvaud.     

Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data

This paper applies the most recently developed panel unit root, heterogeneous panel cointegration and panel-based error correction models to re-investigate co-movement and the causal relationship between energy consumption and real GDP within a multivariate framework that includes capital stock and labor input for 16 Asian countries during the 1971–2002 period. It employs the production side model (aggregate production function). The empirical results fully support a positive long-run cointegrated relationship between real GDP and energy consumption when the heterogeneous country effect is taken into account. It is found that although economic growth and energy consumption lack short-run causality, there is long-run unidirectional causality running from energy consumption to economic growth. This means that reducing energy consumption does not adversely affect GDP in the short-run but would in the long-run; thus, these countries should adopt a more vigorous energy policy. Furthermore, we broaden the investigation by dividing the sample countries into two cross-regional groups, namely the APEC and ASEAN groups, and even more important results and implications emerge.     

The earnings effects of health and health-related activities: a panel data approach

We investigate the effects of health and health-related habits on earnings in China using panel data to control for unobserved heterogeneity related to individual traits and job characteristics. Health-related habits include smoking cigarettes, drinking tea, frequency of drinking alcohol and physical exercising. We find a significant and large impact of health status on earnings, controlling for schooling, experience and the unobserved individual heterogeneity and job heterogeneity. We also find that smoking has a strong negative effect on earnings net of health status, while the estimated effects of other health-related activities are statistically insignificant.     

A nonparametric test for path dependence in discrete panel data

This paper proposes a test for path dependence in discrete panel data based on a characterization of stochastic processes that are mixtures of Markov chains. This test is applied to European Community Household Panel data on employment histories. The data allow to reject the null of no path dependence in all subsamples considered.     

Deep habits in consumption: a spatial panel analysis using scanner data

Using scanner data from a large European retailer, this paper empirically assesses deep habit formation in consumption. Deep habit formation constitutes a possible source of price stickiness and helps to mimic procyclical labour and real wage dynamics that are present in macrodata. To gauge the existence and the extent of deep habits in consumption, we estimate a dynamic time–space simultaneous model for consumption expenditure at different levels of product aggregation. This spatial panel model enables us to test for both internal and external deep habit formation at the same time. The former captures inertia or persistence in consumption and is included in the empirical specification as a time lag. The latter captures preference interdependence across households and is captured by a spatial lag. Our results show mixed evidence with respect to internal habit formation, whereas the external habit effect is almost always positive and significant.     

Measuring the productive efficiency of a group of firms

While the conventional Farrell-Färe approach to efficiency measurement can identify the most inefficient firms, it fails to consider the efficiency of a group of firms thoroughly. This paper introduces efficiency measures that can be used to find the efficiency of a group of firms and pinpoint whether the group inefficiency is due to inefficiency inside or outside individual firms. Furthermore, a new way of finding the revenue maximum shadow price vector is introduced to compute the allocative efficiency of individual firms when price data are not available.     

The heterogeneity of the consumer's preferences over time: A system-wide analysis of discrete panel data

The paper uses the individual and overall tests of heterogeneity for two complete PIGLOG models of expenditure equations fitted to discrete survey data to investigate a possible change in the consumer's preferences in Australia between 1975/76 and 1983/84. The evidence lends support to the hypothesis of significant behavioral change and also indicates that this change is attributable mainly to the convolution of the consumption patterns in current housing costs and food.     

Health expenditure models: A comparison using panel data

In this article, we focus on the estimation of outpatient expenditures with panel data. We model the logarithm of expenditures and consider five different models. The first two are two-part and sample selection cross-section models. Two-part panel data models turn out to be inappropriate for dealing with expenditures. We thus estimate sample selection models with panel data: one without a lagged dependent variable and two with a lagged dependent variable. These two latter models differ in their assumptions on the variance of the residuals. Modelling heteroscedasticity may indeed be important to avoid the bias due to the retransformation problem. We show that lagged dependent variables are important factors for heteroscedasticity. For the models with state dependence, we provide a new solution to the initial conditions problem by controlling for generalised residuals. We establish that panel data models highly improve the correlation explained by the model in the time-series dimension without damaging the fit in the cross-section dimension. For all indicators of fit, the model with state dependence and heteroscedasticity seems to dominate the others.