A dynamic stochastic frontier production model with time-varying efficiency: comment

Abstract

Based on Desli et al. (2003), this comment defines a stochastic frontier production model in a panel data framework. The firms can learn from their past errors to improve technical efficiency. This is done by introducing the inefficiency error term as an AR(p) process. The ways to estimate the production function and technical inefficiency are provided.

Acknowledgement

I benefitted greatly from a short discussion with Dr. Santosh Mishra. All remaining errors are my own.