nep-eff New Economics Papers
on Efficiency and Productivity
Issue of 2011‒04‒16
twenty-two papers chosen by
Angelo Zago
University of Verona

  1. Measurements of Agricultural Productivity and Efficiency Gains from NAFTA By Yeboah, Osei; Gunden, Cihat; Shaik, Saleem; Allen, Albert; Li, Tongzhe
  2. An Econometric Approach To Estimating Support Prices And Measures Of Productivity Change In Public Hospitals By C.J. O’Donnell; K. Nguyen
  3. The Transatlantic Productivity Gap: Is R&D the Main Culprit? By Raquel Ortega-Argilés; Mariacristina Piva; Marco Vivarelli
  4. An Economic Performance Analysis of the Beef Cow-herd Enterprise Using a Stochastic Frontier Function By Cho, Jaesung; Park, Seong Cheol; Bevers, Stanley J.
  5. Banking Geography and Cross-Fertilization in the Productivity Growth of US Commercial Banks By Dogan Tirtiroglu; A. Basak Tanyeri; Ercan Tirtiroglu; Mehmet Kenneth N. Daniels
  6. The effect of national culture on countries’ innovation efficiency By Halkos, George; Tzeremes, Nickolaos
  7. The productivity of public capital: A meta-analysis. By Ligthart, J.E.; Martin Suarez, R.M.
  8. TFP growth and its determinants: nonparametrics and model averaging By Michael Danquah; Enrique Moral-Benito; Bazoumana Ouattara
  9. Climate Variability and Agricultural Productivity: Evidence from Southeastern US By Solis, Daniel; Letson, David
  10. Evaluating the Role of Migration on Technical Efficiency By Glazyrina, Anna; Shaik, Saleem
  11. R&D and productivity in high-tech manufacturing: a comparison between Italy and Spain By Sterlacchini, Alessandro; Venturini, Francesco
  12. Adjusting for cultural effects on countries’ education policy efficiency:an application of conditional full frontiers measures By Halkos, George; Tzeremes, Nickolaos
  13. Efficiency Measure in Nitrogen Management under U.S. Trade Induced Corn Production By Yeboah, Osei; Gunden, Cihat; Allen, Albert; Akuffo, Akua S.
  14. Investments in Intangible Assets and Australia’s Productivity Growth — Sectoral Estimates By Barnes, Paula
  15. Intensive versus Extensive Dairy Production Systems: Dairy States in the Eastern and Midwestern U.S. and Key Pasture Countries the E.U.: Determining the Competitive Edge By Nehring, Richard F.; Sauer, Johannes; Gillespie, Jeffrey; Hallahan, Charles
  16. Moderate versus Big Cows: Do Big Cows Carry Their Weight on the Ranch? By Doye, Damona; Lalman, David L.
  17. Measuring economic journals’ citation efficiency: A data envelopment analysis approach By Halkos, George; Tzeremes, Nickolaos
  18. Bank ownership and performance in the Middle East and North Africa region By Farazi, Subika; Feyen, Erik; Rocha, Roberto
  19. Environmental Performance and Climate Policy By Brännlund, Runar; Lundgren, Tommy; Marklund, Per-Olov
  20. Market reforms, legal changes and bank risk-taking – evidence from transition economies By Fang , Yiwei; Hasan, Iftekhar; Marton, Katherin
  21. Determinants of Profitability Performance: An Analysis of Class I Railroads in the United States By Allen, Albert J.; Shaik, Saleem; Myles, Albert E.; Yeboah, Osei-Agyeman
  22. The Impacts of Farm Size and Economic Risk on No-Till Rice Whole-Farm Profitability By Watkins, K. Bradley; Hignight, Jeffrey A.; Anders, Merle M.

  1. By: Yeboah, Osei; Gunden, Cihat; Shaik, Saleem; Allen, Albert; Li, Tongzhe
    Abstract: The primary objective of this study is to empirically determine whether North American Free Trade Agreement (NAFTA) has contributed to increased agricultural productivity in any of its member countries. Implementation of the NAFTA began on January 1, 1994. This agreement removed most barriers to trade and investment among the United States, Canada, and Mexico, in which all non-tariff barriers to agricultural trade between these countries were eliminated. Data Envelopment Analysis (DEA) and the Malmquist Productivity Index were used to estimate the total factor productivity change, technical change, and efficiency change of agricultural production for each NAFTA country. Then, using time series data, the efficiency changes in countries were compared to determine whether NAFTA has been beneficial to the agricultural sector of a member country. , Total factor productivity, technical change, and efficiency change of agricultural production in NAFTA countries were analyzed for the period 1980-2007, and then a comparison between pre- and post-NAFTA periods was also made. In the analysis, aggregate agricultural production was used as the output, and five variables were considered as the inputs, which included: land, labor, capital, fertilizer and livestock. The results revealed that the average annual total factor productivity increased by 1.6 percent during the 1980-2007 period for NAFTA countries, mainly coming from technical change. Total factor productivity did not change obviously during the pre-NAFTA period. In contrast, it increased by 2.7 percent due to technical improvements in post-NAFTA period. Consequently, it is noticeable that compared to the pre-NAFTA period, the countries especially Mexico performed better by achieving higher levels of productivity in agricultural production.
    Keywords: Agricultural Efficiency, Data Envelopment Analysis, Malmquist Index, NAFTA, Total Factor Productivity, International Relations/Trade,
    Date: 2011
  2. By: C.J. O’Donnell (CEPA - School of Economics, The University of Queensland); K. Nguyen
    Abstract: In industry sectors where market prices are unavailable it is common to represent multiple-input multiple-output production technologies using distance functions. Econometric estimation of such functions is complicated by the fact that more than one variable in the function may be endogenous. In such cases, maximum likelihood estimation can lead to biased and inconsistent estimates of the model parameters and associated measures of firm performance. We solve the problem by using linear programming to construct a quantity index. The distance function is then written in the form of a conventional stochastic frontier model where the explanatory variables are unambiguously exogenous. We use this approach to estimate productivity indexes and support (or shadow) prices for a sample of Australian public hospitals. We decompose the productivity index into several measures of environmental change and efficiency change. We find that the productivity effects of improvements in input-oriented technical efficiency have been largely offset by the effects of deteriorations in the production environment over time.
    Date: 2011–03
  3. By: Raquel Ortega-Argilés (Faculty of Economics, University of Barcelona); Mariacristina Piva (-); Marco Vivarelli (-)
    Abstract: The literature has pointed to different causes to explain the productivity gap between Europe and United States in the last decades. This paper tests the hypothesis that the lower European productivity performance in comparison with the US can be explained not only by a lower level of corporate R&D investment, but also by a lower capacity to translate R&D investment into productivity gains. The proposed microeconometric estimates are based on a unique longitudinal database covering the period 1990-2008 and comprising 1,809 US and European companies for a total of 16,079 observations. Consistent with previous literature, we find robust evidence of a significant impact of R&D on productivity; however – using different estimation techniques - the R&D coefficients for the US firms always turn out to be significantly higher. To see to what extent these transatlantic differences may be related to the different sectoral structures in the US and the EU, we differentiated the analysis by sectors. The result is that both in manufacturing, services and high-tech sectors US firms are more efficient in translating their R&D investments into productivity increases.
    Keywords: R&D, productivity, embodied technological change, US, EU. JEL classification:O33
    Date: 2011–03
  4. By: Cho, Jaesung; Park, Seong Cheol; Bevers, Stanley J.
    Abstract: Standardized Performance Analysis (SPA) data from Texas, Oklahoma, and New Mexico were used to examine the economic performance of beef cow herd operations in the Southern Plains region by measuring their technical efficiency index. Factors that make significant impacts on the production are herd size, machinery investment per breeding cow, and rainfall. Little technical inefficiency among the Southern beef cattle operations that participated in the SPA data was found.
    Keywords: beef, cattle, cost, cow-calf, production, stochastic production function., Farm Management, Livestock Production/Industries, Production Economics,
    Date: 2011
  5. By: Dogan Tirtiroglu (The University of Adelaide, Business School, Australia); A. Basak Tanyeri (Bilkent University, Faculty of Business Administration Ankara, Turkey); Ercan Tirtiroglu (The University of Adelaide, Business School, Australia); Mehmet Kenneth N. Daniels (Virginia Commonwealth University, School of Business Richmond, VA)
    Abstract: The US banking industry offers a unique, natural and fertile environment to study geography's effects on banks' behavior and performance. The literature on banks' operating performance, while extensive, says little about the influence of spatial interactions on banks' performance. We compute and examine, using a physical distance-based spatio-temporal empirical model, the state-wide total factor productivity growth (TFPG) indices of US commercial banks for each state for the 1971-1995 period. We observe that the productivity growth of commercial banks in state i depends strongly, positively, and contemporaneously on the productivity growth of commercial banks located in state i's contiguous states. Further, “regulatory space” appears to induce frictions and lessen the documented spatial interactions. These findings support our plea that research on commercial banking sector's behavior need to pay a particular attention to the effects of banking geography.
    Keywords: Spatial, Commercial Banks, Total Factor Productivity Growth, Kalman Filter
    JEL: D24 C23 G21 G28 K23
    Date: 2011–04
  6. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper contributes to the link between social and cultural factors with countries innovation performance. By measuring 25 countries’ innovation efficiency with the use of conditional and unconditional DEA (Data Envelopment Analysis) frontiers the paper provides empirical evidence of the effect of culture on countries’ innovation efficiency. Particularly, conditional and unconditional full frontier models are used alongside with bootstrap techniques in order to determine the effect of national culture on countries’ innovation performance. The study illustrates how the recent developments in efficiency analysis and statistical inference can be applied when evaluating such issues. The results reveal that national culture has an impact on countries’ innovation efficiency. Analytically, the results indicate that higher PDI (power distance index), IDV (individualism) and UAI (uncertainty avoidance) values have a negative effect on countries innovation efficiency, whereas masculinity values appear to have a positive effect on countries innovation performance.
    Keywords: National culture; Innovation efficiency; Conditional efficiency; Bootstrap procedures
    JEL: C14 C02 C61 Z13 O14
    Date: 2011–04
  7. By: Ligthart, J.E. (Tilburg University); Martin Suarez, R.M.
    Date: 2011
  8. By: Michael Danquah (Swansea University); Enrique Moral-Benito (Bank Of Spain); Bazoumana Ouattara (Swansea University)
    Abstract: Total Factor Productivity (TFP) accounts for a sizeable proportion of the income and growth differences across countries. Two challenges remain to researchers aiming to explain these differences: on the one hand, TFP growth is hard to measure; on the other hand, model uncertainty hampers consensus on its key determinants. This paper combines a non-parametric measure of TFP growth with model averaging techniques to addess both issues. The empirical findings suggest that the most robust TFP growth determinants are unobserved heterogeneity, initial GDP, consumption share, and trade openness. We also investigate the main determinants of the TFP components: efficiency change (i.e. catching up) and technological progress (i.e. innovation).
    Keywords: Productivity, Bayesian Model Averaging, Nonparametric methods
    JEL: O47 C11 C14 C23
    Date: 2011–04
  9. By: Solis, Daniel; Letson, David
    Abstract: The goal of this study is to empirically evaluate the extent to which agricultural productivity estimates are affected by variation on climate. To do so, we explore the case of the agricultural sector in the Southeast US. This geographical region is influenced seasonally by the El Niño Southern Oscillation (ENSO) phenomena making it ideal for studying the interaction of climate variability and agricultural productivity. Although, different methodologies have been developed to study TE the stochastic production frontier (SPF) approach offers several advantages over other available alternatives (Kumbhakar and Lovell 2003). Thus, to assess the impact of climatic on TE we estimate alternative SPF models with and without climatic variables. We also test alternative variables to measure the influence of climate on TE; namely, seasonal rain fall and the ENSO phase.
    Keywords: Climate Variability, Productivity, US, Production Economics,
    Date: 2011
  10. By: Glazyrina, Anna; Shaik, Saleem
    Keywords: Migration, Technical Efficiency measures, DEA, hyperbolic distance function, World-wide countries, Community/Rural/Urban Development, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies,
    Date: 2011
  11. By: Sterlacchini, Alessandro; Venturini, Francesco
    Abstract: Using data for twelve manufacturing industries over the period 1980-2006, we perform for Italy and Spain a dynamic panel estimation of the long-run elasticity of TFP with respect to R&D capital. The results show that in Spain high-tech industries have experienced a similar or slightly higher R&D elasticity than their Italian counterparts. This is mainly attributable to what occurred from the mid 1990s onwards when, thanks to increasing R&D efforts, the Spanish industries have been able to catch up with the respect to the Italian ones. The policy implications of the above findings are discussed.
    Keywords: Manufacturing industries; Italy and Spain; Productivity growth; R&D capital
    JEL: O30 O40 L60
    Date: 2011–04–04
  12. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: In this paper using Data Envelopment Analysis (DEA) we evaluate the influence of national culture on education policy efficiency for 20 OECD countries. For that reason bootstrap techniques have been employed in order to produce biased corrected efficiency scores and confidence intervals are been calculated. By using probabilistic approaches it conditions the effect of national cultural values on the obtained countries’ educational efficiencies. The empirical results indicate that the efficiency of education policy is mainly influenced from differences of individualistic and masculinity values among the countries. However the results clearly indicate that education policy reforms must be based outside those national cultural bounds in order to support national economies on their foreseen challenges.
    Keywords: Data Envelopment Analysis; Education; Linear programming; Statistics
    JEL: C14 I21 C60
    Date: 2011–04
  13. By: Yeboah, Osei; Gunden, Cihat; Allen, Albert; Akuffo, Akua S.
    Abstract: The overall objective of this paper is to measure the impact of the undesirable outputs from NAFTA (agricultural production and trade) on the environment by years in post-NAFTA period. Data Envelopment Analysis (DEA) was used to measure environmental efficiency by considering desirable (corn production) and undesirable (nitrogen) outputs in fifteen states. DEA allowed us to measure the level of nitrogen pollution to be reduced by modeling undesirable output in efficiency evaluation. Data from 15 states (Colorado, Illinois, Iowa, Indiana, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Carolina, Ohio, South Dakota, Texas and Wisconsin) on corn production, land use and nitrogen fertilizer from 1994-2008 (post-NAFTA) were considered. The results indicated environmental inefficiency, nitrogen pollution and land use inefficiency were increasing over the years in the post-NAFTA period.
    Keywords: Data Envelopment Analysis, Environmental Efficiency, Nitrogen Pollution, NAFTA., International Relations/Trade,
    Date: 2011
  14. By: Barnes, Paula (Productivity Commission)
    Abstract: This Productivity Commission staff working paper (by Paula Barnes) examines sectoral investment in intangible assets in Australia following on from a previous paper on an examination of intangibles assets in the market sector as a whole. It highlights some significant issues relating to the measurement of intangibles and their contribution to productivity, finding that estimates of intangibles at the aggregate level mask considerable sectoral differences. <p>In recent years increased attention has been given to the contribution to economic growth of intangible assets such as knowledge, firm-specific skills and better ways of doing business. But most intangibles are treated as current expenses in official statistics, rather than as assets — despite the fact that they provide services in more than one period. This makes it difficult to examine their role in the economy. It leads to an understatement of investment in the economy and may also affect measures of productivity growth. <p>This paper addresses two questions: does the importance of intangibles as part of total investment vary across sectors?; and does the exclusion of many intangibles from investment measurement affect the measures of sectoral economic growth and productivity? <p>The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.
    Keywords: intangible assets; sectoral investment; productivity; assets; human capital; R&D; research and development; brand equity
    JEL: E24 O30 O40
    Date: 2010–07
  15. By: Nehring, Richard F.; Sauer, Johannes; Gillespie, Jeffrey; Hallahan, Charles
    Abstract: In recent years, significant structural and production system changes have been noted in the U.S. and European Union, as well as increased interest in pasture-based dairy systems. Technical efficiency, returns to scale, and farm characteristics are compared by size and production system in traditional U.S. dairy states and E.U. countries.
    Keywords: U.S., EU Countries, Dairy Systems, Technical Efficiency, Returns To Scale, Size, Technology, Land Prices, Production Economics, Q12,
    Date: 2011–01–14
  16. By: Doye, Damona; Lalman, David L.
    Abstract: Efficiency in beef production and economics is impacted by cow maintenance requirements and output. Budget and linear programming analysis are used to evaluate cost and returns for two cow sizes on two different pasture systems. Moderate-sized cows on native pasture generate the greatest pre-tax returns to management and overhead.
    Keywords: cow size, beef production, beef returns, beef cost of production, linear programming, beef systems, Farm Management, Livestock Production/Industries, Production Economics, Q12,
    Date: 2011–01
  17. By: Halkos, George; Tzeremes, Nickolaos
    Abstract: This paper by using Data Envelopment Analysis (DEA) and statistical inference evaluates the citation performance of 229 economic journals. The paper categorizes the journals into four main categories (A to D) based on their efficiency levels. The results are then compared to the 27 “core economic journals” as introduced by Dimond (1989). The results reveal that after more than twenty years Diamonds’ list of “core economic journals” is still valid. Finally, for the first time the paper uses data from four well-known databases (SSCI, Scopus, RePEc, Econlit) and two quality ranking reports (Kiel Institute internals ranking and ABS quality ranking report) in a DEA setting and in order to derive the ranking of 229 economic journals. The ten economic journals with the highest citation performance are Journal of Political Economy, Econometrica, Quarterly Journal of Economics, Journal of Financial Economics, Journal of Economic Literature, American Economic Review, Review of Economic Studies, Journal of Econometrics, Journal of Finance, Brookings Papers on Economic Activity.
    Keywords: Ranking journals; Data Envelopment Analysis; Indexing techniques; Nonparametric analysis
    JEL: C14 C02 C61 C67
    Date: 2011–03
  18. By: Farazi, Subika; Feyen, Erik; Rocha, Roberto
    Abstract: Although both domestic and foreign private banks have gained ground in MENA in recent years, state banks continue to play an important role in many countries. Using a MENA bank-level panel dataset for the period 2001-08, the paper contributes to the empirical literature by documenting recent ownership trends and assessing the role of ownership and bank performance in MENA while accounting for key bank characteristics such as size and balance sheet composition. The paper analyzes headline performance indicators as well as their key drivers and finds that state banks exhibit significantly weaker performance, despite their larger size. This result is mainly driven by a larger holding of government securities, higher costs due to larger staffing numbers, and larger loan loss provisions reflecting weaker asset quality. The results reflect both operational inefficiencies and policy mandates. The paper also provides a detailed performance analysis of foreign and listed banks. Foreign banks are fairly new in MENA, yet perform on par with domestic banks despite their smaller size and higher investment costs. Listed banks exhibit superior performance driven by higher interest margins even in the face of higher costs associated with listing. Taken together, the results do not reject the development role for state banks, but do show that their intervention comes at a cost. As such, there is scope to reduce the share of state banks in some countries and to clarify the mandates, improve the governance, and strengthen the operational efficiency of most state banks in MENA.
    Keywords: Banks&Banking Reform,Access to Finance,Debt Markets,Corporate Law,Bankruptcy and Resolution of Financial Distress
    Date: 2011–04–01
  19. By: Brännlund, Runar (CERE); Lundgren, Tommy (CERE); Marklund, Per-Olov (CERE)
    Abstract: This study’s ultimate goal is to analyze environmental performance (EP) at firm level and the effectiveness of environmental policy along with other possible determinants. Especially, the empirical analysis aims at exploring the relationship between the actual EP of firms in terms of CO2 emissions per output unit, and one aspect of Swedish environmental policy, the CO2-tax. Since Sweden was the first country to introduce a specific CO2-tax in 1991 we believe that the Swedish case may serve as an appropriate “test bench” for analyzing EP and the effectiveness of environmental policy in general. To achieve our objective we use a panel data of Swedish manufacturing spanning over the period 1990-2004. The results suggest that EP has improved in all sectors of manufacturing. We also see that production increases while emissions decrease in many sectors, indicating a decoupling of economic growth and environmental degradation. Furthermore, firms’ EP responds to changes in the CO2-tax and fossil fuel price, but is more sensitive to the tax, indicating different EP behavior among firms depending on why the cost of fossil fuels change. Several sectors also display a positive tendency over time in EP, which may suggest that EP is to some extent stimulated by an overall boost in environmental awareness in society and firms.
    Keywords: CO2 emissions; CO2-tax; environmental performance
    JEL: D24 Q56 Q58
    Date: 2011–04–06
  20. By: Fang , Yiwei (Lally School of Management and Technology, New York); Hasan, Iftekhar (Lally School of Management and Technology, New York, and Bank of Finland,); Marton, Katherin (Fordham University, New York)
    Abstract: The policy changes and structural reforms in transition economies over the past two decades have created exogenous variations in institutional development, which offers us an ideal natural experiment to analyse the causal effects of institutions on bank risk-taking behaviour. This paper examines a wide array of institutional reforms in respect of law and legal institutions, banking liberalization, and enterprise restructuring in privatization and corporate governance. Using a difference-in-difference approach, we find that banks’ financial stability has increased substantially subsequent to the institutional reforms. Further analysis suggests that the enhancement of financial stability mostly comes from the reduction of asset risk. Moreover, the effects of institutional reforms on bank risk are more pronounced for domestic banks than foreign banks. From the policy consideration, our study sheds light on the risk implications of different institutional reforms that have been characterizing transition countries.
    Keywords: institutional development; bank risk; transition banking; foreign ownership
    JEL: G21 P30 P34 P52
    Date: 2011–03–23
  21. By: Allen, Albert J.; Shaik, Saleem; Myles, Albert E.; Yeboah, Osei-Agyeman
    Abstract: The purpose of this study was to estimate the impact of internal and external variables on the net profit margins of Class I railroads for the period 1996-2009. Parameter coefficients show that market concentration had a significant and negative impact on the net profit margins of the carriers.
    Keywords: Class I Railroads, Profitability Performance, Pooled Analysis, Agribusiness, Industrial Organization, Marketing, L25, L92,
    Date: 2011
  22. By: Watkins, K. Bradley; Hignight, Jeffrey A.; Anders, Merle M.
    Abstract: This study evaluated the impacts of farm size and stochastic return variability on no-till (NT) rice profitability at the whole-farm level. Mixed integer programming was used to determine optimal machinery complements, fuel consumption, and machinery labor requirements for conventional till (CT) and NT rice-soybean farms of 1200, 2400, and 3600 acres in size. Crop yields, market prices, and prices for key production inputs were simulated to construct stochastic whole-farm net returns for each farm size under CT and NT management, and both first and second degree stochastic dominance analysis were used to rank cumulative distribution functions of whole-farm returns according to specified risk preferences. The results indicate NT farms exhibit second degree stochastic dominance over CT farms regardless of farm size, and high input prices have less downward effect on the profitability of NT farms relative to CT farms.
    Keywords: mixed integer programming, no-till, profitability, rice, risk, simulation, stochastic dominance, whole-farm, Farm Management, Production Economics, Risk and Uncertainty,
    Date: 2011

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